Legal Question in Real Estate Law in Michigan

My father has passed, i am now the owner of the property. My father had a line of credit on the house, my question is am i legally under obligation to pay back the loan? Could they foreclose on the house if its not paid for?

Asked on 8/14/12, 4:30 pm

1 Answer from Attorneys

Glenn Matecun Matecun, Thomas & Olson, PLC
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You have two questions:

(1) Are you legally obligated to pay back your father's home loan? No, you are not, unless you signed the promissory note.

(2) Can the lender foreclose if the loan is not paid? Generally, yes. This is assuming that your father was the sole owner of the home at the time he acquired the loan.

Here is what I am assuming happened, in this order: Your father owned the home. He received a loan that was secured by the home. And then he quitclaimed the home to the two of you, as joint tenants with rights of survivorship. In that case, if the loan is not paid, the lender can foreclose.

If you owned the property at the time of your father's loan (and the deed was recorded), you would have been required to sign the mortgage or the mortgage would not be valid.

Think of it this way. The lien (mortgage) follows the house, not the person. If you could avoid the mortgage and debt by deeding the property to someone else and then dying, the banks would never collect on a loan because everyone would deed their homes to someone else right before they died.

Hope this helps, good luck.

Glenn R. Matecun

gmatecun@mtolaw.com

www.MichiganEstatePlans.com

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Answered on 8/14/12, 4:41 pm

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