Can the Bank Foreclose on My Deceased Relative's Home?
Full Question:
Answer:
When a person dies, their assets are distributed in the probate process. If a person dies with a will, a petition to probate the will is filed with the probate court in the county where the deceased resided at the time of death, asking for letters testamentary to be issued, giving the executor authority to handle the estate affairs. If a person dies with a valid will, an executor is named to handle the distribution of the estate. If the person dies without a valid will, the court appoints an administrator to distribute the decedent's assets according to the state's laws of intestacy. The court will issue letters of administration, also called letters testamentary, to the administrator, giving the authority to handle the affairs of the deceased. An heirship affidavit may also be used to conduct estate affairs when a small estate is involved. In cases where the decedent didn't own property valued at more than a certain amount, which varies by state, the estate may go through a small estate administration process, rather than the formal probate process.
If small estate procedures may be used, an affidavit may be used to distribute the assets of the deceased in a summary process. If the estate doesn't qualify as a small estate, it may be necessary to have the estate probated and receive letters testamentary. The court will issue testamentary letters to the executor or administrator, giving the authority to handle the affairs of the deceased.
If the decedent was a resident of New Mexico at the time of his death, it is possible small estate procedures may be used to collect the assets if the estate is not worth more than $30,000, after subtracting liens and encumbrances. If the value is higher, it will be necessary to open a probate case and petition the court to have an administrator appointed for the estate.
In New Mexico, where the value of the entire assets of the estate does not exceed $30,000, a small estate may be administered by a small estate affidavit. After the affidavit has been approved by the court, the affidavit may be used to collect debts owed to the decedent.
The affidavit is filed with the clerk of the court in the county where the deceased resided. It lists certain information required by statutes, such as all of the known assets and liabilities of the estate, the names and addresses of the distributees, and the relevant family history or other facts concerning heirship that show the distributees' rights to receive the money or property of the estate. Please see the information at the link below for statutes and specific requirements. A link to an heirship affidavit has also been provided.
Once approved by the court, the affidavit may be presented to those who owe debts to the deceased, such as a bank, in order to collect the property or money owed. If small estate procedures are not available, it is possible to probate an estate without an attorney. Please see our New Mexico probate forms.
Certain assets are not included as part of a person's estate and may pass outside of probate, such as trust assets and transfer on death accounts or property owned by joint tenants which passes under a right of survivorship when one tenant dies. Bank accounts and insurance policies which name a beneficiary to transfer the asset to at death are considered transfer on death assets that are not included in and pass outside the probate estate.
If the assets of the estate are insufficient to pay off the mortgage, it may be necessary that it is sold or foreclosed upon. I suggest you speak with the lender before attempting a sale of the property on your own, as a transfer may trigger a due-on-sale clause in the mortgage, requiring the full balance of the mortgage to be paid in full. Whether to repair the property will be a matter of calculation after determining the fate of the house and whether any proceeds will be forthcoming from it.
We are prohibited from giving legal advice, as this service provides information of a general legal nature. We suggest you contact a local attorney who can review all the facts and documents involved.
Please see the following NM statute:
45-3-1201. Collection of personal property by affidavit.
A. Thirty days after the death of a decedent, any person indebted to the decedent or having possession of tangible personal property or an instrument evidencing a debt, obligation, stock or chose in action belonging to the decedent shall make payment of the indebtedness or deliver the tangible personal property or an instrument evidencing a debt, obligation, stock or chose in action to a person claiming to be the successor of the decedent upon being presented an affidavit made by or on behalf of the successor stating that:
(1) the value of the entire estate, wherever located, less liens and encumbrances, does not exceed thirty thousand dollars ($30,000);
(2) thirty days have elapsed since the death of the decedent;
(3) no application or petition for the appointment of a personal representative is pending or has been granted in any jurisdiction; and
(4) the claiming successor is entitled to payment or delivery of the property.
B. A transfer agent of any security shall change the registered ownership on the books of a corporation from the decedent to the successor or successors upon the presentation of an affidavit as provided in Subsection A of this section.
C. The affidavit made pursuant to this section may not be used to perfect title to real estate.
History: 1953 Comp., § 32A-3-1201, enacted by Laws 1975, ch. 257, § 3-1201; 1983, ch. 194, § 8; 1995, ch. 210, § 48.
