Legal Question in Real Estate Law in Maryland
home equity loan with a life estate
a life estate holder in maryland has gotten a home equity loan secured by a deed of trust. the deed of trust states several times that she is a fee simple owner. the land deed on the property clearly states she is not. also, the deed of trust is stamped no title insurance required. does this mean a title search was not done. secondly, can the heirs of this property sell their share while the life estate is still in effect.
2 Answers from Attorneys
Re: home equity loan with a life estate
The heirs can purchase an opinion of title or a title insurance policy on the interest they have. Real Property can usually be sold subject to a life estate, but the value is much less.
Re: home equity loan with a life estate
The life estate holder may have misled the lender, or the lender may have made its own mistakes in examining title. The statement about the lack of title insurance does not mean that no title search was done. Unless the instrument creating the life estate reserved to the life tenant powers over the remainder, the life tenant could not, and therefore did not, encumber the remainder. The "heirs" (i.e., the owners of the remainder interest) can legally sell that interest free of the deed of trust (again, provided the life tenant did not have powers over the remainder).