Q: Can quitclaim deed signed by my father before his death be challenged by unsecured creditors?
My dad was diagnosed with last stage heart failure following a massive heart attack. This disabled him from working. Knowing his life would be cut short, he quitclaimed his property to me. Signed, notarized and recorded with the county. The property DOES have a mortgage (specifically, a land loan) , however, we spoke to his bank before the quitclaim and was told that as long as I make the payments, we are good to go and they wouldn’t enforce a “due on sale” and not to worry about refinancing..Approx 5 months later, my dad passed. My concern is that dad has numerous unsecured debts through credit cards. All varying between 10k-20k adding up to quite a bit. Can these unsecured creditors come back and take the property he quitclaimed to me and my husband? I realize now, we could’ve gone another route with the deed but what’s done is done. We now live on the property and don’t plan to sell. I have no other use for probate, as the property is the only asset I want to keep.
A: I have assumed that the property is in Oklahoma. Creditors would have to establish their claim against the estate through the probate court. If a probate proceeding is not initiated by one of the family members, a creditor could initiate the proceeding. After establishing their claim, they would have to prove that the transfer was made to delay or hinder creditors. (There are a number of issues relating to proving such a claim). Even if they did that, they would be behind the mortgage on the property. The creditor's interest in doing any of that would depend upon whether there is any equity in the property (the value of the property in excess of the mortgage amount). Each of the above steps has several issues related to them. The answer to your specific question can only be answered after a full review of all of the facts.
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