I Inherited a House with a Mortgage in Florida. What Are My Next Steps?

Get The Legal Help You Need

By Gary M. Landau, Esq.

Call (954) 979-6566 Today
I Inherited House with Mortgage in Florida. What Are My Next Steps? | Call (954) 979-6566

When Julianna received the call from her late uncle’s probate lawyer, she was surprised to learn he had left her his charming ranch home in Coral Springs, Florida. But the news was bittersweet, because the house still had a large mortgage. Julianna liked the idea of owning a second home she could use for vacations, but she already had a mortgage on her official home and hadn’t anticipated the responsibility of owing money on two.

Julianna felt overwhelmed by the questions swirling through her mind: What to do if I inherited a house with a mortgage in Florida. What are my legal requirements under the state’s real estate law, and how will this impact my financial future?

As an experienced real estate attorney, our firm often counsels individuals throughout South Florida in situations similar to Julianna’s. Complicating matters, the financial repercussions to inheriting a home with a mortgage generally come at a time people are grieving the death of a beloved family member.

The boutique law firm of Gary M. Landau, P.A. in Coral Springs, Florida, recognizes that inheriting a home can be a source of joy but also an obligation. This blog, from a knowledgeable real estate lawyer, delves into what you need to know when inheriting a house with a mortgage in Florida.

Continue reading to learn more, then contact the Law Office of Gary M. Landau at (954) 979-6566 to schedule your free consultation by phone, in person, or on Zoom. We serve Coral Springs, Deerfield Beach, Parkland, Pompano Beach, Boca Raton, Lighthouse Point, Fort Lauderdale, Hallandale Beach and all of South Florida.

According to Florida Law, Who Is Responsible for the Payments When Inheriting a House With a Mortgage?

Given that Florida is a popular place for retirees and snowbirds along with families of all ages and stages, many people own property in the state, which means inheriting a home with a mortgage is quite common. But who is entitled to the home’s ownership after someone dies and who is responsible for its debt depends on how the deed was structured, whether it was the deceased person’s primary residence, and if they created an estate plan while they were alive.

If the title to the home was held solely in the name of the deceased person, the house becomes part of their estate and is subject to probate proceedings. It’s important to note that during the probate process, before the house officially passes to beneficiaries, monthly mortgage payments should be paid by the personal representative, ideally from money in the estate bank account if enough remains there. If the decedent did not have a last will and testament, the heirs generally choose who will be the personal representative, or the court can appoint someone to this role.

If instead the house was jointly owned by the deceased and another person, typically the surviving spouse or sibling, with the deed decreeing them as having “joint tenancy with rights of survivorship,” that person becomes the sole owner of the property. In this circumstance, the surviving homeowner becomes responsible for continuing to pay the mortgage.

If the property was the person’s primary residence, Florida law grants specific rights to the surviving spouse or minor children. These “homestead” laws provide for ownership rights for these individuals, even if the person’s will designates a different beneficiary for the home.

It is important to consult an experienced real estate attorney to understand your legal obligations and rights when a home is left to you in someone’s will.

An Inherited House and Heirs’ Responsibilities

Whether you plan to keep a house that is bequeathed to you or, especially if you plan to sell it, there are steps you should take once it is clear someone has left their property to you.

  1. Continue Making Mortgage Payments Federal law requires lenders to allow family members to assume a mortgage on inherited property. Each month that you own the home you must make a mortgage payment in full and on time to avoid defaulting on the loan and facing foreclosure. If necessary, seek guidance from an attorney or financial planner on how best to handle these payments.
  2. Pay Property Taxes, Maintenance, and Homeowners Insurance. Part of the obligation of owning a home includes property taxes, homeowners/condo association maintenance, and insurance. Failing to fulfill these obligations can result in a lien or high expense. (For example, every home with a mortgage is required by the lender to stay current on insurance or they may purchase a policy for you.) With the increased number of hurricanes in Florida, it’s also wise to have flood insurance, which is generally purchased separately. The importance of flood insurance was made clear to one of our law firm’s recent clients when she inherited a home that was almost immediately damaged by flooding from Hurricane Milton.
  3. Keep the Home in Good Condition. During the period before the probate is finalized, the home may be unoccupied. Still, you’ll want to ensure the grass is cut and the exterior and interior properly maintained. Of course, this maintenance should continue once the property’s title passes to you, especially if you plan to sell it.

Impact of Estate Tax on Inherited Properties

In addition to dealing with the mortgage and other debts, in some cases there may also be estate tax liabilities if you inherit a house in Florida. Estate taxes are federal taxes imposed on the transfer of property after death. The vast majority of inherited properties will not be subject to these taxes.

However, if the total value of the person’s estate exceeds $13.61 million (as of 2024), their beneficiaries may be responsible for paying estate taxes on the excess amount. Consult an estate attorney who can help you understand your potential tax liabilities and plan for them.

What Happens When There Are Other Heirs?

Multiple people can inherit a house. For example, a person may leave their home to several of their grown children. Or in cases where there is no will and no living spouse, the courts typically grant equal ownership to all the person’s grown children. Of course, this means the mortgage and other costs are shared equally as well.

Problems often arise when one or more of the new owners wants to sell the home while others want to keep it. To avoid complications, all parties should communicate openly and work together towards a mutually beneficial solution. This may involve selling the property and dividing the proceeds equally or coming up with an agreement for one party to continue living there and assume ownership and responsibility for the mortgage.

Consider Your Options: Sell, Keep, Refinance, or Rent?

Option 1: Assume the Mortgage

When inheriting a house with a mortgage in Florida, one option is to assume the existing loan. In this case, you, as the new owner, agree to take over the remaining balance and continue making mortgage payments. If the interest rate and terms of the loan are favorable and you plan to keep the property, this is often the best approach.

Option 2: Refinance

Another option is to refinance the inherited mortgage, which involves taking out a new loan in your name to pay off the existing mortgage. Depending on the interest rate of the original loan, refinancing may allow for lower monthly payments or different terms that better suit your financial situation. Keep in mind that refinancing can incur fees and closing costs.

Option 3: Rent the Home

If you plan to keep the inherited property but not to live there full-time, renting it either short-term or long-term can generate income and cover at least some of the mortgage payments. This option requires a deep understanding of the responsibilities of becoming a landlord, such as finding tenants, managing the property, and complying with landlord-tenant laws. If you want to operate the property for short-term rentals, such as on AirBnB, you’ll need to evaluate whether the homeowners/condo association and local laws allow for that.

Option 4: Sell the Property

Many people who inherit a home, especially one with a mortgage, choose to put the house up for sale. If there is equity in the home, this provides you with money and eliminates the burden of mortgage payments.

Consult a real estate attorney for guidance on navigating the sale process. And remember that until the deal closes, you are still responsible for paying the monthly mortgage and other upkeep costs.

Seek Professional Guidance from a Knowledgeable Real Estate Lawyer in South Florida

Inheriting a house with a mortgage can be overwhelming, especially if you’re unfamiliar with the legal and financial aspects involved. That’s why it helps to seek guidance from a reputable South Florida real estate lawyer who can advise you on the best course of action for your situation.

A knowledgeable real estate lawyer can help you navigate the realities of inheriting a property with a mortgage. With their guidance and support, you can make informed decisions that will benefit your current and future financial well-being.

Protect Your Assets & Explore Your Options with the LAW OFFICE OF GARY M. LANDAU, P.A.

Have you inherited a house in Coral Springs, Boca Raton, Fort Lauderdale, Deerfield Beach, Pompano Beach, Miami-Dade County or elsewhere in South Florida?

With more than 25 years of experience in our practice areas and countless satisfied clients, Gary M. Landau and his team are uniquely positioned to help you with your probate and real estate needs in Coral Springs, Parkland, and throughout Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are purchasing a home, have inherited a home, or want a closing agent to handle title insurance and all documents for your closing or refinancing, the LAW OFFICE OF GARY M. LANDAU, P.A. is ready to work with you.

Call our office at (954) 979-6566 or complete our online form today to schedule a free consultation. We work with our clients in person, over the phone, or on Zoom.

Copyright © 2024. LAW OFFICE OF GARY M. LANDAU, P.A. All rights reserved.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.

LAW OFFICE OF GARY M. LANDAU, P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
(954) 979-6566
https://garylandau.com/

0/5 (0 Reviews)

Frequently Asked Questions

A will is the simplest way to ensure that your funds, property and personal things will be distributed after your death the way you want them to. Even if you have very few assets, you will benefit from having a will. About half of all Americans die without a will (known in legal terminology as dying intestate). Without a will to indicate your wishes, the court steps in and distributes your property according to state law. A will ensures that your assets will be given to family members or other beneficiaries you designate.

 

Having a will is doubly important if you have young children. One section of the will allows you to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children, who may not be the person you desire.

Many Florida residents have out-of-state wills, drawn up while they were still living among the hills of North Carolina or the hubbub of New York. If the will was valid according to your old state’s laws at the time you made it, it is still legal in Florida. However, if you are a Florida resident, you may benefit greatly by having a new will drawn up in Florida, because it will likely be more easily admitted to probate.

 

It is important to know that each state has its own requirements for what makes a will a legally binding document. For example, Florida doesn’t recognize handwritten wills that haven’t been witnessed (known as “holographic wills”), or oral wills not put into writing, even if other states okay them. There’s also the matter of Florida estate law. In this state, for example, your surviving spouse is entitled to 30 percent of your net probate estate, regardless of what you say in your will. The spouse may also have a “Homestead” interest in property you share here, even if you want your house to go to someone else. In fact, all real property owned in Florida will be subject to this state’s laws, even if you’re a snowbird maintaining a residence in the state where your will was drawn up. Other peculiarities also exist, which is why a Florida will could make things much easier for your heirs.

 

If you would like to have me review your current out-of-state will, I am happy to do so without charge. If it turns out to be in accordance with Florida state laws and procedures, you can continue to rely on it. If not, however, your heirs would rather you discover that now.

It is a good idea to re-read your will every few years to be sure it reflects up-to-date realities (you may not want to leave your heirloom to a niece you are no longer speaking to, nor have someone be named your child’s guardian if they have taken seriously ill since you drafted your will). It is especially important to reexamine your will if:

 

  • You have gotten married since it was last drafted;
  • You have made bequests to people who have fallen out of your favor or are no longer living (I recently updated the will of a man who had left everything to his first wife, who was long deceased), or you have not included people who are now dear to you;
  • You would like to change the person named as the personal representative of the estate. (Note: Florida law does not allow a nonresident of the state to serve in this position, unless it is an immediate family member or certain other relatives);
  • You have acquired pricey or sentimental items that are not accounted for in your will. Do note, though, that Florida law allows you to attach a separate personal property memorandum to your will, detailing who will get which specific items. This list can be changed whenever you want.

Perhaps I should answer this question with where not to store it: in a bank’s safety deposit box. Although it may seem logical to put this with your other important papers, it is often difficult for your heirs to gain access to the box once you die, since the box is sealed then and must be opened in the presence of a bank employee.

 

One good option is to leave your original will with the attorney who drafted it, making copies for your personal representative and other important relatives and letting them know who has the original. For my clients who prefer that I store their original will, I keep it in a fireproof will vault in my office, or in the vault in my bank.

 

As an alternative, you could store the will in a fireproof box or vault in your own home.

 

Wherever you store it, be sure to let your personal representative and other close relatives know where you have put it!

Probate is when the court oversees your assets and liabilities after your death. During probate, the court makes sure that your will is valid and acceptable; that all debts, bills, creditor’s claims, and taxes are paid from your estate’s assets; and that your remaining assets are distributed to your beneficiaries according to your will (or, if no will exists, by Florida law).

 

Probate usually does take longer than most beneficiaries would like. But in order to ensure that everyone with a right to a claim is included in the process, the court requires several steps. If the size and complexity of your estate are minimal, however, the entire process of probate can take as little as a few months. Larger estates that are subject to IRS estate taxes or those involving litigation on the part of creditors or heirs generally take longer, often one or more years.

 

To speed the process along for simple and small estates, the courts allow a shortened form of probate, known as “summary administration,” which requires much less paperwork and time.

A personal representative (PR) is a friend or relative, or an attorney or bank, who is put in charge of the estate until all matters regarding the probate are resolved. (In other states, this person is sometimes called an executor or administrator.) The job of the PR includes identifying all assets, searching for creditors and paying valid claims, filing required estate tax returns if the estate is large enough (the figure escalates over time, according to Congressional laws), coordinating with the probate court and attorneys, and overseeing the distribution of assets–all done under the guidance and assistance of a qualified attorney.

 

Serving as a PR is an important role, and such a person should be selected with care as to who is most willing and best able to serve in this position. By Florida law, your personal representative must be over 18 years of age, and be a blood relative, your spouse, the parent or child of your spouse, or a Florida resident.

Generally, no. If you co-own all property via such legal structures as “tenancy by the entirety” or by “joint tenancy with right of survivorship” the property immediately passed to you upon your spouse’s death. Proof of death is usually all that is needed to pass such jointly owned title for cars, stocks, and other personal property to the surviving spouse.

 

But if even one asset was held solely in the deceased person’s name, or any property is owned in the form of a “tenancy in common,” that estate will be required to go through probate. If the assets are limited, the shorter, simpler form of probate is generally all that is required.
Scroll to Top