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Debra, Lawyer
Category: Canada Law
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Experience:  Lawyer
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My husband willed a house he owned to his sister. She has always

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My husband willed a house he owned to his sister. She has always lived in it, he never did; she paid him the mortgage every month. His name is XXXXX XXXXX mortgage. My lawyer had the will probated; the estate was declared debt-free. The title on the house was transferred to his sister; six months later she has still not applied for a mortgage. The mortgage payments have been coming out of her bank account.
My question is this: I have reason to believe she is never going to apply for the mortgage or be approved if she does. I cannot afford to pay the mortgage for her if she defaults or doesn't pay for any reason, and once she discovers she is not legally liable to pay, I would not be surprised if she stopped payments.
This situation leaves me and the house in limbo: she owns the title, my husband (or his estate) holds the mortgage.
The mortgage co. tells me the estate is liable to pay for the house if she is denied a mortgage, payments cease, and/or she never applies for a mortgage.
My husband's estate account has about $2000 in it. His other assets were life insurance, RRSPs, and $10,000 in a bank account. All of this was inherited by me. Our family home is in my name, and always was.
If the worst came to the worst, and my husband's estate was deemed to owe the money on this mortgage, would I be legally bound only to give them the amount in the estate account? All other money has passed into my bank accounts, or I was named beneficiary for, as in the RRSPs. The estate, as I said before, was probated, and declared debt-free.
I have done what I can to give the house to his sister. If she cannot get a mortgage or won't apply, and the mortgage remains the responsibility of the estate, am I allowed to sell the house to pay the debt? If this is not possible, I cannot afford to pay it. Would the mortgage company be able to take my money - rather than the estate's - to pay it? I have RRSPs and savings in my own name.
Thank you.

JD 1992 :

The mortgage company could only make a claim against the assets of the estate, not yours and not against any assets that passed to you "outside of probate" which basically means by contract. So if you were the named beneficiary on life insurance, bank accounts, etc. then they aren't subject to being used to pay the creditors.


Thank you. Would I be able to sell the house without legal penalities? It was willed to the sister, but she has not picked up the ball.

JD 1992 :

I'm not sure what you mean by "without legal penalties" but if it was left to the sister and the transfer had already taken place there is no way you could sell it.


The transfer of title is complete; but my husband's name is XXXXX XXXXX the mortgage. Therefore, who owns it?

JD 1992 :

The estate owes the mortgage and the house belongs to the sister.

JD 1992 :

Did you have a lawyer assisting you with the probate?


Yes. The probate went through and the estate was declared debt-free, which is confusing, as there is this mortgage outstanding.

JD 1992 :

You said your lawyer "had the will probated", did he actually take part in advising you on what to do?

JD 1992 :

The estate wasn't debt free. Was the mortgage listed on the probate?


Well, he told me what the procedure was, and went ahead with it for me.

JD 1992 :

I'm sorry, is this in Canada?


I will have to check that. I don't know. I thought it was because we had the will probated solely because of the house willed to his sister.


Yes, Canada.

JD 1992 :

This was in the US estate section. Let me transfer it to the Canada Law.



JD 1992 :

Ignore what I told you until you hear from a Canada expert.

I am a Canada law expert and I am happy to try and assist you.

Something is not adding up.

Why did your estate lawyer say the estate is debt free if your spouse's name is XXXXX XXXXX to the mortgage?
Customer: replied 4 years ago.

I'm really not sure about that. I looked only cursorily at the documents the other day and saw "debt free".

Something is not adding up.

But let me explain the law generally to you.

You personally are not liable for any debts of the estate.

But any assets in the estate would have to go to any debt.

If there is more than enough equity in the house then the estate is really not a much risk. The bank would foreclose, seize and sell the house, and the mortgage and foreclosure fees and penalties would all come off the proceeds of the sale. If any money is left over it would go to the owner.

So the only time the estate would be at risk is if there is not enough equity.

If that were the case then the estate would have to pay the shortfall.

And the estate would most assuredly sue the sister if that were to happen. In fact if the sister refuses to remortage or refuses to pay even on payment the estate should sue her at once.

I suggest you consult with your estate lawyer first. Then if the lawyer is not clear about this area of the law you should consult with a litigation lawyer.

But first find out why the documentation lists no debts if there is a mortgage.

Let me know if you need further clarification.
Customer: replied 4 years ago.

Yes, I must check that. Perhaps I read it wrong. I have been in touch with the lawyer and will be again. I wonder if you can just tell me briefly if I am in a lot of legal trouble if the probate papers (I think they were) say the estate is debt free when it isn't? Could the paper have left out the mortgage legitimately?

You aren't in any trouble.

There is nothing that would turn on this.

If assets were left out then the estate would owe higher probate fees. But if this error was made no harm came from it and you are going to be just fine. Don't worry.
Debra, Lawyer
Category: Canada Law
Satisfied Customers: 99954
Experience: Lawyer
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Customer: replied 4 years ago.

Thank you so much. Your answers were really helpful.

Thanks for letting me know and thanks very much for the rating.

Please take the time to participate in the customer satisfaction survey as that will go into my record with the site.

And feel free to keep my name in case you need me again down the road. You can always put my name into the subject line the next time you post so that your question will stand out for me and I will answer it just as soon as I can.

Thanks and take good care!
Customer: replied 4 years ago.

Thanks again. I can't find the customer satisfaction survey, but am hoping it will come separately by email.

I believe it will.

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