Legal Question in Real Estate Law in Minnesota
Does death of guarantor terminate obligation when her house was mortgaged to sec
Does the death of a person who is a co-signor/guarantor on a loan secured by a mortgage on the co-signor's property, a homestead, release the property from the obligation? The primary borrower has not defaulted, but she is the guarantor's mother who is in a nursing home and will not likely be able to cover the $40K debt. The home of the guarantor is the primary res of her estate, all of which is willed to her 18 year old only child. The estate also includes two vehicles valued at about $30K total but nothing else of value. Does the heir take the house subject to the mortgage if probated before the primary borrower defaults? How can the heir retain the property if the borrower defaults or does not default either before or after the will is probated? Would she be better off liquidating the vehicles and paying down the mortgage in hopes her grandmother can cover the remaining $10K or is this throwing good money after bad and still leaving her vulnerable to foreclosure? I doubt the grandmother has the cash to make up the $10K to pay off the mortgage, and even if she does, I believe she may now be incompetent and her assets controlled by her wicked son, the co-signor�s brother, who would not likely pay it? I am NOT making this up.
1 Answer from Attorneys
Re: Does death of guarantor terminate obligation when her house was mortgaged to
The death of a party does not affect the debt in any way. An heir takes the property subject to any debts.
The answers to the questions you ask depend on a lot of important details like, how much is the property the worth? If it is worth more than the mortgage then it is probably worth saving or selling prior to foreclosure.
If the decedent is a co-signer, she does not necessarily have any title to the property, which may well rest with the mother in the nursing home. So the propery may well pass to the deadbeat son, depending on the will of the mother who appears to be the owner of the property.
This is should not be considered legal advice, much more information is required to render a reasonable opinion and the persons affected should retain counsel to protect their interests.
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