[WSBAPT] Inherited mortgage

Wed Oct 11 20:37:59 PDT 2017

Lisa:

Yes, but the transfer from decedent was exempt to B&S. I am skeptical that B's subsequent transfer to S is covered by GSG. 

John J. Sullivan

Sent from my iPhone

> On Oct 11, 2017, at 6:06 PM, Lisa E Schuchman <lisa at lisaschuchman.com> wrote:
> 
> John,
> 
> That's my big question, too.  As long as S is still there, in theory it shouldn't be a problem. But like I said, some banks haven't even heard of G-St. G, so who knows how they'd handle it. 
> 
> On Oct 11, 2017, at 6:04 PM, John J. Sullivan <sullaw at comcast.net> wrote:
> 
> Lisa:
> 
> If decedent is the only one on the note, lender can only foreclose - cannot go after B or S for deficiency. Usually in these scenarios clients muddle through and as long as payments continue to be timely the lender is satisfied. 
> 
> I agree with Eric that since B is not being relieved of personal liability there is no consideration to him from S for REET purposes. 
> 
> I do have one concern though. While Garn-St. Germaine exempts the transfer from decedent to B&S jointly at death, in not sure it exempts the subsequent transfer of B's interest to S by gift for purposes of due on sale. I'd argue there's no trigger because one of the heirs still owns now the whole. But I'm not sure of that one. 
> 
> John J. Sullivan
> 
> Sent from my iPhone
> 
> On Oct 11, 2017, at 3:07 PM, Eric Nelsen <Eric at sayrelawoffices.com> wrote:
> 
>> Agree with John. Personal obligation to pay a debt is determined by who signed the Promissory Note. A mortgage (Deed of Trust) is just an agreement to let the bank seize the house if the Note isn't paid.
>>  
>> If mother is the only signer of the Note, then B and S have no personal liability for the debt no matter what. Their inherited ownership of the house is subject to the lender's mortgage and right to foreclose for non-payment, so B and S have practical reasons to pay the debt they aren't liable for...but no matter what B and S do with transfers of ownership, they aren't liable to lender on the original debt.
>>  
>> If B gift-quitclaims to S, there is still no need for indemnity that I can see, because B remains free of personal obligation on the Note.
>>  
>> Under that scenario, I think there is no REET due either. See WAC 458-61A-103(2).
>>  
>> Sincerely,
>>  
>> Eric
>>  
>> Eric C. Nelsen
>> SAYRE LAW OFFICES, PLLC
>> 1417 31st Ave South
>> Seattle WA  98144-3909
>> phone 206-625-0092
>> fax 206-625-9040
>>  
>> From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
>> Sent: Wednesday, October 11, 2017 2:41 PM
>> To: WSBA Probate & Trust Listserv
>> Subject: Re: [WSBAPT] Inherited mortgage
>>  
>> So B and S are both mortgagors on the existing mortgage? Or was the mortgage taken out by the decedent they inherited the property from? If the latter, neither is personally obligated on the underlying note. 
>>  
>> If the former, B remains liable directly to lender under the promissory note. He would have to secure a release from the lender, which is rarely granted without S refinancing and qualifying separately. 
>>  
>> Secure indemnification agreement with second position deed of trust? If brother is relieved of liability at time of transfer there might be consideration for REET purposes. 
>>  
>> John J. Sullivan
>> 
>> Sent from my iPhone
>> 
>> On Oct 11, 2017, at 2:27 PM, Lisa E Schuchman <lisa at lisaschuchman.com> wrote:
>> 
>> Sister (S) and brother (B), both adults, inherited a house from their mother on her death.  We’re getting ready to close the probate and transfer title to them.  They understand that they can keep the existing mortgage without additional need to qualify.  But if B later gifts his share of the house to S, can B disentangle himself from the mortgage obligation and leave S fully liable?  I know that Garn-St. Germain wouldn’t apply to that transfer, but since S is already in the place of the mortgagor can B get out of it?  Does anyone have a better suggestion?
>>  
>> Thanks.
>>  
>> Lisa E. Schuchman
>> 206-960-4212
>> www.lisaschuchman.com
>> 
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