Legal Question in Real Estate Law in California
I own the mortgage note on a home in California. The man who bought the home recorded it in his name only as his sole property. Unfortunately he passed away and left no will. His wife would like to have the house put into her name and a new note drawn up in her name at a reduced amount. I have agreed to this. She has moved into the house and has continued to make his payment.
My questions are. How do we; 1.) Transfer the property to her name? 2.) Close the note we now have with him and write off the balance owed as a bad loan? 3.) Record a new note in a reduced amount in her name? 4.) What is the 1st step in this process????
Thank you.
SD
5 Answers from Attorneys
Without a will or trust, his assets have to go through probate, and then can the title be transferred by court order. She needs to consult and hire probate counsel in her area to get proper action done.
Step One is for the wife to probate the estate. A spouse does not automatically inherit the other spouse's separate property. The key applicable law is Probate Code section 6401(c), under which the wife's share may be 100%, one-half or one-third. She only gets 100% if her husband had no surviving "issue" (descendants), parent, brother, sister, or issue of a deceased brother or sister. There is very likely going to one or another such kin around. She needs a lawyer with experience in probate.
Ah, all these "in the box" lawyers. They have both identified the big problems you and she face in carrying out your transaction, but neither of them spotted the simple answer. Foreclose and then sell it to her at your agreed price with seller financing. Any other heirs are foreclosed out, you avoid probate, and it can be completed in about 120 days, instead of months like probate. If you'd like help with documents and proceedures for implementing that plan, feel free to give my office a call.
The problem with the above is that you cannot foreclose on a deceased person. Therefore if the property is not worth over $ 150K she may obtaine title via declaration. Contact me directly.
Mr. Bame's answer is dead wrong. I posted a response to this before, and somehow Lawguru deleted it. The death of a beneficiary does not prevent foreclosure of a deed of trust. On the death of the trustor, the beneficiary can proceed to foreclose under the power of sale without filing a waiver of recourse in a trustor's estate. (Cosentino v. Coastal Construction Co. (2nd Dist. 1994) 30 Cal.App.4th 1712, 1716.) The rule would be different if the property were actually encumbered by a mortgage lacking a power of sale. If the property is encumbered by a mortgage lacking a power of sale, then you could only foreclose by filing a court action, and that would involve making the executor or administrator of the debtor's estate a party to the action.
The transfer procedure described by Mr. Bame is also inapplicable to transfers of real property. That method is for estates less than $100,000, and only applies to collect money, tangible personal property, or property that is evidence of a debt (such a promissory note or deed of trust, etc.) that is in the possession of another person.
Mr. Whipple is correct that the property would have to be transferred to her through probate. I note that Mr. Bame's office address is listed as San Diego, however the California State Bar lists his address on Wilshire Boulevard in Los Angeles. I would approach this individual with caution as it may be an unlicensed paralegal using Mr. Bame's name.