Many family members of the deceased who have left behind real estate in Canada are not clear on a lot of things. One of their concerns is; can a bank foreclose on a house in probate. If you are someone that is looking for clarity on this subject, you have come to the right place; come along now.
Meaning of Probate:
When a person passes away, leaving behind his estate, an application will lie to the Surrogate Court for probate grant. Probate verifies who the beneficiaries as well as executors of the estate.
If the deceased person has left behind a will, then the court investigates whether the will in question is the decedent’s final will. The court will also delve into the circumstances of the creation of that will. For instance, if the said will was in his right frame of mind and without any duress. Thus, for the probate process to end successfully if the court is satisfied.
– the genuineness of the will and
– the genuineness of the legal heirs
The probate process takes about 3 to 4 months.
If the person dies without leaving any will, the process for verification of the beneficiaries is similar to probate. Called letters of administration, it takes similar time for granted.
What happens if the deceased’s property is with encumbrances?
It is not unlikely that the property estate that devolves on the legal heirs has several liabilities on it. In this case, the legal heirs have to pay off the mortgage debt, pay credit card bills, and even pay the debts that the deceased family member was liable to pay.
Probate helps to sort everything out:
Here is a list of dues and expenses that probate deems to settle the decedent’s estate:
– Mortgage balance
– Creditor’s debts
– Condo fees and maintenance liabilities
– Property taxes per federal laws
– Tax on income
– Mortgage balance on a car or any other loan
– Loans acquired for studying
– Life insurance
– Mortgage payments on the loan for retirement plan
– Credit card bill
– Utilities such as electricity, telephone on the decedent’s estate
All the above fees, charges, and bill payments are kept alive until the probate gets granted. As far as possible, the payments go from the estate of the deceased only. There should be no burden on the beneficiaries to pay any of the bills out of their own pockets until the probate gets settled and the property devolves on them. However, the beneficiary can take a call.
The beneficiary can choose to pay:
The beneficiary of the estate can decide that he wants to keep the decedent’s estate with its liabilities. He can choose the property with the mortgage debt and opt to pay monthly payments to continue paying it down.
Dealing with bills during probate:
The executor is the person who is responsible for administering property in probate. He will determine what debts are valid and up to what extent the estate liquidated help to be able to realize the bills drawn on the property. He can decide to make a short sale to pay the expenses on the estate while under probate.
Alternatively, the beneficiaries may choose to make payments on the estate and later ask to get reimbursed from the estate’s sale.
The federal laws in this connection:
According to St. Germain Depository Institutions Act, 1982, federal laws allow the lenders to recover their due from foreclosure when the property changes hands due to death. The beneficiary may either choose to assume the mortgage during the probate or after the probate.
A lot of people use a mortgage and home loan interchangeably; no! There is a basic difference between the two. A mortgage is more than a home loan because of the presence of security, which is the property. This security protects the lender interest even if ownership of the property changes overnight and without any warning.
The house may change any number of hands, but as long as the mortgaged property is present, the mortgagor is in good hands; he will get his money no matter what. The banks in this connection have all rights to take the property and sell it to recover the money. In the case of joint ownership on the mortgaged property, the joint owner will be liable to pay monthly payments.
The most important question is: Can a bank foreclosure on the house in probate? Yes, they can! Death does not dissolve the mortgage arrangement. If the decedent’s executor and beneficiaries fail to repay the money, then the bank can go ahead and foreclose on the house.
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