Sacramento, CA asked in Estate Planning, Real Estate Law and Probate for California

Q: In CA, what happens to co-borrowed mortgage in the event one of the borrowers dies?

For instance, a married couple decided to borrow a mortgage together. However, some years later one of the borrowers dies. I understand that the surviving spouse takes over the payments assuming they are still financially able to, but wouldn't part of the mortgage be part of the decedent's estate's debts, regardless if the surviving spouse technically takes over the remaining payments being that they co-borrowed? Also assuming if their ownership title was "tenants in common" but not "joint tenancy"

2 Lawyer Answers
Julie King
Julie King
Answered
  • Estate Planning Lawyer
  • Monterey, CA
  • Licensed in California

A: It depends. California is a community property state so, assuming the debt is a joint debt, it's likely either spouse will be required to pay the full amount due -- but it will depend on the language in the paperwork you signed when you originally received the loan. A lawyer would have to read your paperwork to answer your question. But you could start by checking to see if your paperwork contains the words "joint and several" in the payment section. That phrase means the bank can require EITHER one in the married couple to pay the whole debt. The phrase gives the bank flexibility to go after either spouse, rather than being forced to get the money from both people. So the bank can go after whichever one has money.

The most common scenario is that the bank will look to the surviving spouse to pay the whole amount due. But, since interest rates are at historical lows, if your payment is too high for you to make, you might want to try to refinance at a lower interest rate. If you need any additional assistance, take your loan papers to an attorney for interpretation. Best wishes!

Nina Whitehurst
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Answered
  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in California

A: Ms. King is correct. I will add a couple of additional thoughts. You didn’t say whether the mortgage secures a home loan. If it does, federal law generally prohibits the lender from calling the whole loan due upon the death of one of the borrowers. Also, it is so unusual for a married couple in California to own property as tenants in common that I have to recommend that you have an attorney review not only the loan documents but also the deed so that you can get personalized advice tailored to your actual circumstances.

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