Attorneys Stephen Korshak and Lee Karina Dani

What are your options if you inherit a home with a lien attached?

On Behalf of | Oct 9, 2023 | Residential Real Estate |

Inheriting a home from a loved one is often a mixed blessing. Whether immediately or sometime in the future, you’ll likely sell it and make a fair amount of money on it. However, in the meantime, there are a lot of things to deal with. You’ll need to continue paying the mortgage (if there is one) as well as insurance and taxes if they’re due and keep the property secure. If you decide to sell it, you’ll need to determine whether to sell it as-is or put some money into repairs and upgrades to get a better price.

Another unexpected (and unwanted) complication may involve discovering that there’s a lien (or multiple liens) on the home. A mortgage is a voluntary lien, but there are other types of liens. Involuntary liens are often placed on property when the owner owes money for things like taxes or other unpaid bills. A court can place a lien, for example, if a creditor won a court judgment. Unlike some debts, a lien doesn’t disappear when the property owner dies. It remains with the property. That means if you accept the inheritance, that lien is your responsibility.

Can you refuse the inheritance?

If you decide that the home and the lien are more than you want to deal with, you can decline (“disclaim”) that inheritance. Florida law has strict requirements regarding disclaiming inherited property. If you’re even considering it, it’s wise to get legal guidance to help ensure that you don’t do anything that would prevent you from being able to disclaim it. Disclaimed property generally “passes as if the disclaimant had died immediately before the interest was created.” If there is a contingent beneficiary listed, they would next be offered the property.

Before you make any decisions, be sure the lien is still valid and not paid off. If it’s relatively small, you may choose to pay it off before you sell the home. If it’s too large to pay off, you may need to sell the home with the lien and pay it off from the proceeds – although selling a home with a lien isn’t always easy. A last resort may be to allow the mortgage lender to take the home.

One thing is almost certain. A home with a lien that’s part of a loved one’s estate will complicate things for everyone and make the probate process lengthier. Working with an estate planning professional can help you as you make decisions and maneuver the process in service of your best interests.