Foreclosure Lawsuits - What Happens When the Homeowner Dies?
1. The Foreclosure Action May Get Delayed as the Probate Court Becomes Involved
If the homeowner dies while his or her home is involved in a pending Florida foreclosure action, under Florida law, the bank who is seeking foreclosure cannot communicate with the non-borrower beneficiary, i.e., the person who stands to inherit the asset under the decedent’s Last Will and Testament. This is true even if the beneficiary is familiar with the foreclosure situation, perhaps has even acted on behalf of the homeowner in past dealings with the bank on the situation. Florida, and Federal laws, including privacy laws, prohibit banks from communicating with a non-borrower beneficiary.
Instead, these laws mandate that the lender in a foreclosure action communicate with the proper legal representative of the homeowner’s estate. This will require a probate action to be opened in a Florida probate court and for a duly authorized personal representative of that estate to be appointed by the court under the Florida Probate Code. (If the bank fails to open an estate or fails to the name the personal representative as a party, this may be grounds to dismiss the foreclosure lawsuit.)
2. The Probate Cannot Be Closed Until the Foreclosure Is Resolved
Why? The applicable Florida laws are designed to protect and preserve the decedent's property. When the homeowner dies in Florida, those who stand to inherit the homeowner’s real estate must wait for the proper disposition of the property under Florida probate law and Florida real estate law.
Under Florida probate law, the instant that someone dies all of their solely owned property is transferred to their legal “estate,” a recognized legal entity that holds title until the estate can be properly administered. The estate is overseen by the personal representative appointed by the Florida probate judge: most people probably recognize this person as an “executor” or “executrix.”
When Florida real estate becomes a part of a Florida probate estate, then Florida probate law can prevent the estate’s personal representative from closing the estate until the property has been transferred to the beneficiaries in accordance with the decedent's Last Will and Testament (if one exists).
This gets complicated when part of the Florida estate is a piece of property that is subject to a Florida Foreclosure lawsuit. The foreclosure must be resolved before clear title can be transferred to the beneficiaries.
With the way Florida foreclosure dockets can be, this means that a Florida probate matter can remain open literally for years unless and until negotiations are successful between the personal representative, the beneficiaries, the estate’s creditors, and the foreclosing bank, to allow for a mortgage loan modification, a short sale, pay-off of the mortgage, or other options (deed in lieu of foreclosure) to move things forward.
Accordingly, it becomes very important in situations where a Florida homeowner has passed away while their property is in foreclosure for the heirs to know not only about their rights and remedies under Florida foreclosure law but also what is required by all parties under Florida's probate law.
Want to Know More?
Feel feel to contact Florida real estate and probate lawyer Larry Tolchinsky for further information. Larry practices in both areas of Florida law. To learn more about Larry and his qualifications:
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