What to do after paying on the mortgage for years and having two siblings? I got asked this question a while back and after some thought decided to blog about this kind of problem. What was my answer?
- Bite the bullet and get an estate opened and hope for the best.
The person asking the question did not like my answer. Without a Will, Indiana's intestacy statute divides the house between the three siblings. That puts the sibling who made the house payments for years (and we will call her sibling #1 from here on) on edge. She wants to keep the house and is far from happy that the non-contributing siblings might get a piece of it.
Sibling #1 does not seem to realize that she has one major problem with her situation. She has been paying the on real estate to which she has no title. Without opening an estate, she cannot get title.
What is meant by title? Title means the ability to show that you own the real estate. Specifically, title means a deed. If you would like a more formal definition, try this one:
TitleSo what is the big deal about having good title to the land? Having good title means that the person having title owns the land and if one does not have good title then they cannot sell the land. So let us say sibling #1 pays off the mortgage, she will not automatically own the land. The mortgage company sends a deed to the dead person. Now sibling #1 could record that deed but what happens when she wants to sell the property? Oops, she is not the owner.
n. 1) ownership of real property or personal property, which stands against the right of anyone else to claim the property. In real property, title is evidenced by a deed, judgment of distribution from an estate or other appropriate document recorded in the public records of the county.
Now, if sibling #1 has lived in the house for ten (10) years she might be able to claim title to the house on the basis of adverse possession. I call that very tricky and a good deal more expensive than opening an estate.
If she does open an estate and wants to keep the house, sibling #1 has some options. First, I say the estate owes her for the mortgage payments and other costs of upkeep for the house. Second, she has the right to offer to buy the house house by paying to the other siblings their share of the house. So take the amount paid on the house against the shares of the other siblings and pay the difference - if any.
Let me be brutally frank about all those schemes about avoiding probate - I think they are scams. They made a lot of money for the people selling those books and schemes but they did so by working on the buyer's biases against paying inheritance tax and paying attorneys. Unlike attorneys, the sellers of these schemes will not be around when the problems come up and cost more than consulting an attorney, more than Indiana's inheritance tax and far, far more than the book on avoiding probate cost. If you want to avoid probate then talk to a lawyer and do not do it on your own.