Ask the expert: a mortgage on a house is a voluntary lien
Your January 31 article said that when a married couple owns an entire house in common, the creditors of one of the spouses cannot exercise a lien on the house during the lifetime of the other spouse. You write that if the debtor spouse dies first, the other spouse will inherit the house freely. My late husband and I owned our shared home. He was on the mortgage, but I wasn’t. I’m on the act. Am I now the owner of the free and open house?
No. You own the house, but you also owe the mortgage.
It is true that if Spouse A’s creditors go to court and obtain a lien on the house he jointly owns with Spouse B, they cannot exercise this “judgment” privilege during Spouse B’s lifetime. A dies first, this privilege will not survive him.
But a mortgage is different. It is a voluntary privilege. When people borrow to buy a house, they agree to give the lender the right to take possession of the property and sell it if the loan is not paid off. And that’s not all. Mortgage borrowers also sign a note personally guaranteeing the mortgage loan. (The borrower’s personal guarantee gives the lender the right to claim their property if the sale of the house does not generate enough money to repay the loan.)
The lender’s interest in the house did not disappear when your late husband died; and his succession is bound by his personal guarantee. You must continue to make mortgage payments; and if you sell the house while the mortgage is outstanding, the lender has the right to recover the proceeds of the sale.
The bottom line
A mortgage is secured by the lender’s interest in the property and the borrower’s personal collateral. The death of the borrower does not eliminate the rights of the lender even if the surviving co-owner is not on the mortgage.
More information
nwsdy.li/NoloJointlyOwnedLinks
Clarification: New York State Unemployment Benefit Recipients Should Visit dol.ny.gov/unemployment/1099-g-tax-form to get Form 1099-G, which they’ll need to complete their 2020 federal and state income tax returns.
TO ASK THE EXPERT Send your questions to [email protected] Include your name, address and phone numbers. Questions can only be answered in this column. Advice is provided as general guidance. Check with your own consultants for your specific needs.