By Fredrick P. Niemann, Esq. a New Jersey Estate Administration Attorney
When a husband and wife own property as tenants by the entirety (but only one name is on the mortgage) and the husband dies, can the wife legally transfer the mortgage into her own name?
I had this situation come up recently where the husband died 3 years ago; wife notified the bank 1 year later and they named her as Executor on the account. She continued making the monthly mortgage payments and no other issues came up. Now the lending bank has over collected the property taxes, and they tell wife they cannot issue refund checks into her name alone but only back to the estate account of her husband in which she is named executor.
How can this issue be resolved? There had not been a need to probate the estate 3 years ago as all remaining accounts were in joint names.
First, my reaction was that I don’t see why the wife would want to transfer a mortgage obligation into her name. If wife owns the property but isn’t liable on the mortgage, moving the mortgage into the wife’s name would cause wife to take on a substantial debt obligation under the promissory note. If the mortgage isn’t transferred to the wife, then it would be like a non-recourse loan to wife because it can only be collected from the husband’s estate but not from the wife. While I’ve never researched this issue since husband’s legal interest in the property terminated upon death and wife is not on the mortgage, the mortgage isn’t even enforceable against her and only the estate.
I would think the simplest way to get any refund on the surplus taxes would be to probate husbands will. Another option might be to leave the taxes with the bank and just have the bank collect smaller installments down the road because less will be needed to fund property taxes.
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