Ask the Expert: A mortgage on a house is a voluntary lien
Your Jan. 31 article said that when a married couple own a house jointly by the entirety, one spouse's creditors can't exercise a lien on the house during the other spouse's lifetime. You write that if the debtor spouse dies first, the other spouse would inherit the house free and clear. My late husband and I owned our home jointly. He was on the mortgage, but I am not. I am on the deed. Do I now own the house free and clear?
No. You own the house, but you also owe the mortgage.
It's true that if Spouse A's creditors go to court and get a lien on the house he owns jointly with Spouse B, they can't exercise that "judgment" lien during Spouse B's lifetime. And if Spouse A dies first, that lien won't survive him.
But a mortgage is different. It's a voluntary lien. When people borrow to buy a house, they agree to give the lender the right to take possession of the property and sell it if the loan isn't repaid. And that's not all. Mortgage borrowers also sign a note personally guaranteeing the mortgage loan. (The borrower's personal guarantee gives the lender the right to come after his assets if selling the house doesn't generate enough money to pay off the loan.)
The lender's interest in the house didn't disappear when your late husband died; and his estate is liable for his personal guarantee. You must continue making mortgage payments; and if you sell the house while the mortgage is outstanding, the lender is entitled to recoup from the sale proceeds.
The bottom line
A mortgage is secured by the lender's interest in the property and the borrower's personal guarantee. The borrower's death doesn't eliminate the lender's rights even if the surviving joint owner isn't on the mortgage.
More information
nwsdy.li/NoloJointlyOwnedLiens
Clarification: New York State recipients of unemployment benefits should visit dol.ny.gov/unemployment/1099-g-tax-form to obtain Form 1099-G, which they will need to complete their 2020 federal and state tax returns.
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