Q: What happens to a mortgage when the joint tenant(mother) passes away and the surviving joint tenant is her son?
A: The mortgage is still attached to the dirt and needs to be paid to avoid foreclosure. You can communicate with the mortgage company if you remind them of a new (in 2017) law California Civil code 2920.7. It allows a successor in interest to communicate with the mortgage company. Possibly they will let you assume the mortgage!? Or possibly you can keep on paying it. In my experience it is rare that a mortgage company calls a mortgage as due and payable but I suppose that's theoretically possible. Good luck. -John
Bill Sweeney agrees with this answer
A: Sorry to hear of your loss. There is an old saying, "you cannot escape debts and taxes". So in this situation, the mortgage remains and has to be paid according to its terms. The surviving joint tenant (son) should just keep making the payments. The mortgage lender may want the son to reapply to qualify for being the debtor on the mortgage unless the son was a joint tenant on the property at the time the mortgage was taken out. The lenders are typically pretty lenient on this, particularly if the loan is well secured and if there is a good payment history. However, most mortgage loan documents contain a paragraph stating that the mortgage loan is due upon sale or transfer and they may take the position that the death of the joint tenant is a transfer triggering the loan to become due.
Another concern is that for the son to become the 100% legal record title owner, he will need to file an affidavit of death of joint tenant in proper legal form with the county where the property is located. ALSO, AND THIS IS CRITICAL, papers need to be filed with the county to claim the parent-child exclusion from property tax reassessment. If the form is not prepared in proper form or is not filed with legal deadlines, THE PROPERTY TAXES WILL GO UP TO AN AMOUNT BASED UPON CURRENT MARKET VALUE.
I strongly recommend that a lawyer skilled in title transfers on death be retained to review the situation and prepare the proper papers and cause them to be filed with the right office with the county. I am available to do this as I have probably done 500 to 1,000 of these over my legal career.
Thanks, David L. Crockett, attorney, CPA, CA real estate broker.
Bill Sweeney agrees with this answer
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