Take over property or not (deed issue)

4 Replies

Hello
Hoping someone can help with this answer before digging in deep.  I have an elderly ill father with two mentally handicap brothers in the state of Florida.  He wants to bequeath his home to me so that my brothers will always have a home (nothing can be under their names or else SSI and Disability is removed)

Issues:

  • There is still a mortgage - he owes on the house more than house is worth (but value is going up)

He divorced his 2nd wife who tried to sue for half the property, however this was a premarital purchase, so divorce judge said she had no claims to home.

  • he was in foreclosure before the divorce and was able to save the house under one of the Obama 'save your home programs', however at that time, it was refinanced under both his and her name.
  • Prior to divorce he added her name to deed so in event of his death, the house would not go into probate

My question is if he is divorced now does he have to still legally remove her from deed? If he passes away would there be an issue if the deed has not been updated?

He is on a fixed income and he really wants me to take over this house and I am looking at all the positives/negatives.  The house was built in 1989 and does have potential but needs about 30-50k of work. New roof, update kitchen, new a/c etc...any thoughts, input advice is greatly appreciated 

This really is a question for a lawyer, but it seems like if the ex-wife is still on the deed, then she has some legal claim to the house. It doesn't seem like there is a ton of equity in the house, so you may not be losing too much.

Your dad needs to use an estate attorney to place this property in a 'special needs trust' for the 2 handicapped brothers.  This is a special type of trust that will allow YOU to be the Trustor or Trustee to managed the property for the benefit of your brothers.  The Trust owns the property so your brother's do not loose their benefits.  Your father can also put any assets into this trust for your brother's benefit too.  That could be used for house expenses such as insurance taxes or repairs.  It can also be used to buy your brothers 'gifts' like clothing, which you would buy as the Trustee or Trustor.  Careful buying controlled things like food as that can reduce their benefits.

Also by titling the property to the trust, generally done by a quit claim, but a deed is better in your case, the attorney can get the ex wife removed from the deed with the divorce decree.  

BUT you also need to figure out how the deed would be paid post your father's life.  Are the brother's benefits enough to qualify for a loan?  Likely not.  Do they manage their benefits now, or could/would you manage them?  If so, you could later co-sign on the loan.  It may be better to redo the loan now too, so that the ex is off that too, and the loan will need to be redone when she is taken off the deed.

Originally posted by @Dominique C. :

Hello
Hoping someone can help with this answer before digging in deep.  I have an elderly ill father with two mentally handicap brothers in the state of Florida.  He wants to bequeath his home to me so that my brothers will always have a home (nothing can be under their names or else SSI and Disability is removed)

Issues:

  • There is still a mortgage - he owes on the house more than house is worth (but value is going up)

He divorced his 2nd wife who tried to sue for half the property, however this was a premarital purchase, so divorce judge said she had no claims to home.

  • he was in foreclosure before the divorce and was able to save the house under one of the Obama 'save your home programs', however at that time, it was refinanced under both his and her name.
  • Prior to divorce he added her name to deed so in event of his death, the house would not go into probate

My question is if he is divorced now does he have to still legally remove her from deed? If he passes away would there be an issue if the deed has not been updated?

He is on a fixed income and he really wants me to take over this house and I am looking at all the positives/negatives.  The house was built in 1989 and does have potential but needs about 30-50k of work. New roof, update kitchen, new a/c etc...any thoughts, input advice is greatly appreciated 

Your question: "if he is divorced now does he have to still legally remove her from deed?" Yes. Two different things here: 1) Title 2) Mortgage - Since it was ruled on in court, the ruling should facilitate having her name removed from 1) Title. Besides that though, since the refinance was in both names, the ex-wife still has a debt obligation to the 2) Mortgage holder even if not a title right. A divorce does not change that. She should want to be removed from the loan if she has no equity interest and only has obligation. However, the mortgage holder is unlikely to allow that. The house would need to be refinanced, paid off or sold to release her from the 2) Mortgage.

If he refinanced out of foreclosure, it is likely that there is a non-interest bearing second mortgage for the amount of the arrears at the time he refinanced. You will need a title report to know. There could also be unpaid taxes.

Someone will need to make the mortgage payment going forward. Who will that be?

Having a house willed to you does not make you obligated to the mortgage. However, if the mortgage payments aren't made, the bank has the right to enforce the terms of the mortgage. (as in sell the house)

Generally, if a bank receives a payment on time, every time, they don't care who makes the payment regardless of who is on the title or note. This is not a "sure thing" but happens frequently and people stay in a house for years making the payment, even though they are not on title and not on the mortgage.

Sounds like he needs to rewrite - and sign - a new will. 

This is an obvious case for an attorney to be involved.