Pikesville, MD asked in Real Estate Law, Foreclosure and Estate Planning for Maryland

Q: I am a trustee on a property that's in pre foreclosure. I would like to buy the home. Trust doc says we can buy and sell

The second trustee is not communicating with the family after helping herself to funds from the trust for her own use.

What can I do to redeem the property from the bank? Can I take over the loan and have the fees removed? Can I refinance although I'm not on the loan? The borrower has been deceased over 10 years. The bank recently found out the borrower is deceased and sent me docs to complete for communication and to determine what I plan to do with the property.

2 Lawyer Answers

Richard Sternberg

  • Estate Planning Lawyer
  • Potomac, MD
  • Licensed in Maryland

A: Your facts are dripping in self-dealing and breach of fiduciary duties, and the claim that one trustee stole funds while the other stole the property are just oozing from your question. The notion that trust instructions give you the power to buy and sell does not mean that you can buy and sell to your own account. You *desperately* need to review the facts privately with a lawyer, and you are flat out nuts if you provide any more facts on an open web forum.

Cedulie Renee Laumann

  • Estate Planning Lawyer
  • Crownsville, MD
  • Licensed in Maryland

A: Under federal law, family members inheriting property may be able to simply take over the mortgage payments instead of refinancing in certain situations. However, whether that is feasible depends on other factors, such as buy-out ability. If the property remains in Trust, it is sometimes possible for a trust to take out its own mortgage (or refinance) but that is more complicated than an individual getting a mortgage on their own residence. If the property is at risk of foreclosure then it would be wise to get guidance as soon as possible. Not doing anything could be a breach of fiduciary duties.

A borrower will need to have some interest in the property to take out a loan against it. A trustee should tread very cautiously when contemplating buying property held in the trust they are administering. If the trustee is one of the beneficiaries and entitled to receive part of the trust estate, and the trust instrument allows for it, then it might be possible to buy-out the other beneficiaries, deed the property, or to receive an in-kind distribution subject to the mortgage, but great care should be taken to avoid improper self-dealing.

While not legal advice I hope this general information helps. You may consider calling the state's foreclosure hotline at 1-877-462-7555 or reaching out to the foreclosure prevention project to get free information on the foreclosure process and timelines.

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