What Is a Probate Sale? What Happens When a Homeowner Passes Away

What Happens When a Homeowner Dies?

When a loved one passes away, there is so much to sort out - not just emotionally, but legally. Determining what happens to a deceased family member’s assets can be taxing, but this article will teach you all about the different options available when a homeowner passes away.

Joint Ownership

If the property is part of a joint ownership, then the co-borrower or cosigner will be the person who is responsible for paying the mortgage. For example, if two spouses own a home together and one of them passes away, the other spouse becomes the sole owner of the property. This person is then responsible for making decisions regarding the property and making sure that the mortgage is paid. This is considered a non-probate asset

Once a year, your lender will send out your mortgage statement so that you can stay updated on the health and life of your loan. While these are calculated once a year, you can also get them monthly or upon request.

It is very important to look at your mortgage statement. If something on your mortgage statement seems inaccurate, you will need to let your lender know right away so that they can correct these records.

Sole Ownership

If the property has a sole owner, it will be considered a probate asset or a probate property. Here, the estate must go through a court-appointed process called probate in order to sort out the new legal ownership and the options therein. Probate assets also come into play for tenants-in-common properties.

During the probate process, the court will determine who inherits the probate estate. If the owner has a will, they will leave the house to a specific person. If they do not, the court will turn to the state inheritance laws to determine who inherits the property. Usually, these inheritance laws give the property to a spouse or direct descendants.

Probate Sales

Probate sales occur when a homeowner passes away without a will. If no one inherits the property and the debt, an estate attorney sells the property. Then, the sale proceeds are divided among the person’s heirs. Probate sales are a long process since the court needs to approve the transaction.

If you are a buyer who is not in a rush to own a home, but is looking for a good deal, probate sales might be a good option. These homes usually sell for under market value but can take weeks, sometimes months, for a court to approve the sale and the buyer to learn if the transaction is moving forward.

Conclusion

When a homeowner dies, what happens to the property depends on the type of ownership - joint ownership, single ownership with a will, and single ownership without a will. If the homeowner does not leave the property to anyone, it may be sold through the probate process.