Legal Question in Real Estate Law in California

Re: Mortage

Generally, as long as the wife continues to make the payments the loan does not need to be paid off. However, the loan will not be "transferred" to the wife.

Re: Mortage

This is an interesting question and not so easy to answer. Here's what I think is the answer, without doing any research, but I cannot guarantee I'm right and before relying on this some research should be done - - -

Your facts don't say whether the mortgage predates the joint tenancy. The first part of my answer presumes it does.

Mortgage lenders are much more concerned about the property securing the loan rather than the identity of the borrower. Among the reasons are that they are required by law to proceed against the property by foreclosure before they have any right to sue the borrower or the borrower's successor.

So, starting with that premise, here's the rest of the rule. When a borrower dies, his estate becomes liable for the mortgage. Technically, the house is not part of the estate if it was held in joint tenancy. However, the house still has a lien against it, securing the lender. Thus, if the wife doesn't pay, there will be a foreclosure and she will lose the house, but as she was never a borrower, she is neither personally liable nor should her credit be affected.

Now, what if the loan was taken out AFTER the joint tenancy was created, not before, and the wife signed nothing. Let's also assume the lender was aware of all the facts (marriage, holding in joint tenancy, etc.). I believe the lien attaches only to the husband's interest, and when he dies, the lender becomes unsecured. However, the lender is now a general creditor of the estate, and may sue the estate or any heir, but cannot foreclose.

In either case, the mortgage needs to be paid off, because the husband's death does not leave the creditor without a legal right to be paid. The only issues are whether the lender must foreclose before suing or must sue as an unsecured creditor, and whether the widow or the estate is the proper party to be sued.