What happen if my sisters and I inherited a property that has a significant equity line of credit attached to it?

UPDATED: Oct 1, 2022

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What happen if my sisters and I inherited a property that has a significant equity line of credit attached to it?

We have been making a little over minimum payments on the loan and renting the property out. Probate closed 3 years ago. Are we obligated to pay it back? The loan is for $44,738.47. I heard that if the bank

didn’t ask to settle the debt during probate and the loan agreement is in my mother’s name they missed the deadline during probate to settle the debt. Is that true? The house has been transferred into our names and we’ve collected rent since her death several years ago.

Asked on November 30, 2018 under Real Estate Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The good news is that you and your sister are NOT personally liable for the loan, unless you refinanced it in your own names, or guaranteed or co-signed it. The other good news is that if a claim was not put in before probate was closed, the bank cannot seek the money from the estate, either.
The bad news is that the lender is still entitled to foreclose if the loan is not paid off IN FULL.  When your mother passed, if she was the only person on the loan, the loan became due: when a person passes away, their mortgages, HELOCs, etc. must be paid. The fact that the lender cannot seek the money from the heirs or, at this point, the estate does not change their right to take the property if not paid; the security interest in the home has not been invalidated. So you have to pay the loan off either entirely, or according to some schedule which the bank/lender voluntarily agrees to, or else lose the home. And you cannot transfer the home without paying off the equity line.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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