
Frequently Asked Questions
- 01
If heirs inherit a property without a will and wish to sell it, they can utilize a process known as "airship" to clear the property's title. This method avoids the complexities and expenses of going through surrogate's court. Instead, heirs can sign affidavits with disinterested parties that establish the deceased's next of kin, allowing the title to be cleared without the need for court proceedings, thus facilitating the sale of the property.
- 02
If you inherit a property without a will and wish to retain it, the primary option is to legally purchase the property. This process involves drawing up a contract of sale, ordering a title search, determining the payoff amount for any outstanding mortgage, and ultimately satisfying that mortgage to obtain clear title to the property. It's important to note that if the property's value is less than what is owed (an "upside down" situation), and a short sale is considered, an heir cannot purchase the property from a family member due to regulations requiring an "arms-length transaction." This rule ensures that the parties involved have no family or business affiliations that could influence the transaction's terms.
- 03
When heirs inherit a property that has no will and no equity, and if the property is "under water" (owing more on the mortgage than the property is worth), they still have several options. If foreclosure has begun, selling the property might be beneficial to avoid the completion of the foreclosure process. The heirs, as the legal owners by operation of law, can agree to sell the property. They can negotiate with the mortgage servicer to potentially arrange a short sale. This process often requires the services of a negotiator who can legally engage with the bank on behalf of the heirs. In such cases, utilizing resources like legal and real estate experts can facilitate the transaction, ensuring the property is listed by a licensed realtor and the negotiations with the lender are handled appropriately.
- 04
If you inherit a property that lacks equity, one viable financial alternative is to enter into an option contract. This contract grants a third party the right to purchase the property within a specified period. Through a short sale transaction under this option contract, it is possible for the seller to walk away with money at the time of closing. The payment received at closing is part of a legally binding contract, similar to other real estate transactions, ensuring both parties are formally committed to the agreed terms.
- 05
If you inherit a property that is "upside down" (owing more than it is worth) and decide to sell it through a short sale, you are not financially liable for the property’s debt, provided you did not sign the original mortgage or promissory note. Under New York State law, while you inherit the title and thus ownership of the home, you do not inherit the financial obligations of the mortgage unless you were a signatory. Thus, selling an inherited underwater home does not make you responsible for any remaining mortgage payments.
- 06
If you inherit a home with a reverse mortgage, you are indeed able to sell the property. A reverse mortgage is similar to a forward mortgage but is typically available to individuals over the age of 62, meeting certain income criteria. Despite this, a short sale can still be accomplished on a property with a reverse mortgage. One key advantage of a reverse mortgage is that it is a non-recourse loan, meaning that heirs or children of the deceased who are not signed on the mortgage cannot be held financially responsible for the debt. This ensures there is no financial exposure for the heirs in the event of a sale, allowing them to handle the property's sale without concern for any outstanding debt liabilities.
- 07
Selling an inherited home with a reverse mortgage offers significant benefits. One major advantage is the use of an option contract, which allows a third party the right to purchase the property for a specified period. This setup is particularly beneficial in a short sale scenario. Even if the property is valued less than the amount owed (underwater), the heir or next of kin can still legally sell their right to sell the property through this option contract. As a result, they can walk away with money from the transaction, turning a potential financial burden into a beneficial situation. This process is both legal and straightforward, providing a clear financial benefit to the heirs involved.
- 08
When an inherited property is in pre-foreclosure and subject to a reverse mortgage, the bank does not have the authority to immediately take ownership after the original owner passes away. Like with a forward mortgage, the lender must commence a foreclosure process, which includes all the procedural steps required under state law. This process provides heirs with time to negotiate and explore options to manage or resolve the property's status before any final action is taken by the bank.

