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Irwin Law
Irwin Law, Attorney
Category: Estate Law
Satisfied Customers: 7243
Experience:  30+ yrs. handling probate estate, wills, trust, inheritance & real estate related matters
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My mother in law left a paid for home equally to her 4 children.

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My mother in law left a paid for home equally to her 4 children. There are no debts to be paid. Everyone agreed that my husband would take the home, borrow against it to make repairs, then take out a mortgage to pay off the other 3 when our house sells. Turns out mortgage regulations won't allow this. As an alternative, can the estate borrow money to renovate then sell it to my husband at the agreed upon pre renovation price? His 1/4 share of the pre renovation price would satisfy the debt.

You have probably already found this out, but straight traditional bank lenders won't loan unless it is for the purpose of your husband buying out the other three heirs.But they won't add the rehab money as part of the purchase price. In theory the estate can borrow money and give a mortgage with the consent of the heirs, but in reality, lenders won't make that kind of a loan.You need to find a private party who makes mortgage loans, usually at somewhat higher than bank rates.

I hope this information is helpful and that you will enter a positive rating. I thank you for submitting your question to Pearl-Just Answer. We appreciate your business. If you need clarification or additional information, please send me a Reply and I will be happy to explain further. Please consult a local attorney to verify the accuracy of this information according to your state's laws.

Customer: replied 4 years ago.
I'm not really concerned about the financing piece as I have already spoken to the credit union. I'm more concerned about whether the personal representative can cause the estate to borrow money under these circumstances.

The PR can only bind the estate so the lender will usually require that the four heirs also sign off on the mortgage. Otherwise, the estate could be closed, the property distributed to the heirs and one (or more) of them might claim that the mortgage wasn't binding on them. This all has to do with State law as to exactly when the title to a decedent's real estate vests in the heirs.

I hope this information is helpful and that you will enter a
positive rating. I thank you for submitting your question to Pearl-Just Answer.
We appreciate your business. If you need
clarification or additional information, please send me a Reply and I will be
happy to explain further. Please consult a local attorney to verify the
accuracy of this information according to your state's laws.



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