Q: life estate and foreclosure
Hello, this situation is complicated.
Father creates life estate on his property giving it to son and wife. Wife takes out a mortgage alone. Son signs deed of trust but nothing on mortgage. Father signs nothing.
A year or so later wife leaves, stops paying mortgage and it goes into foreclosure.
A rule 120 hearing is set and then dropped. A year or so later another hearing is set and then dropped. Now 2 more years later another hearing is now set.
Question is... is there a statute of limitations on this? The mortgage was called due in early 2011.
Also is the mortgage even valid without the life estate owner a party to it? The lender has acknowledged they tried to file a claim against title company but they state it was denied.
A:
This is a complex matter that an attorney will need to review to make a complete and accurate assessment. Justia's Q&A is for general information. Generally speaking, a mortgage on a life estate is only valid for duration of the life estate (i.e. you cannot grant security on property that a person does not own). It is for this reason that many banks will not lend on a life estate. The one exception is if the life estate terminates and the life estate "owner" become a deeded owner.
I suspect that reason for all the failed filings relates to the problem of foreclosing on a life estate is usually pointless because the bank cannot be listed on the deed.
The usual statue of limitations for foreclosure is 6 years. However if the lender did not accelerate the debt (i.e. make a demand for payment in full), the statue of limitations does not begin. There may also be some exceptions due to the life estate matter.
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