Q: Can a surviving spouse with a life estate encumber the property with a mortgage. Property is in Delaware
A: When a surviving spouse has a life estate in a house, there are other heirs who own what's referred to as a remainder interest. This means that these heirs become the sole owners once the spouse with the life estate dies. For this reason, a bank or mortgage company will not allow a spouse with a life estate to encumber the property. Depending on the circumstances, that is not necessarily the end of the story. For example, a bank or mortgage company might be willing to lend the surviving spouse money if the spouse and the heirs with the remainder interest all sign the mortgage. The spouse might be the only one required to sign the Note promising to pay back the money, but everyone who owns an interest in the property would have to sign the mortgage in order for the lender to have a lien on the property to protect the lender in case the spouse fails to make the payments.
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