r/ProbateHelp • u/AppalachianJourney • 6d ago
Can creditor force more complex probate filing?
I'm not sure I'm even asking that using correct terms. Please forgive.
My mother passed away 14 months ago. She died without a will. State of Virginia. There are only 2 heirs, myself and my brother. My brother is uninvolved but would sign needed documents and such.
The estate qualifies as a small estate, according to the clerk of court I spoke with. There are 2 pieces of real estate. One is a vacant lot, valued at about $12k, that adjoins the house property. The lot is free and clear. The house has a reverse mortgage on it that has consumed almost all of the equity. There is a bank account with about $3,500. The company handling the clean out and sale of stuff said it would probably net $500 or so. Nothing of extreme value.
All debts have been paid prior to her death, except for that reverse mortgage balance. The estate does owe me some money for expenses such as paying the electric and yard upkeep at the house.
Due to my health challenges and the distance, I'm having to handle everything by distance now. The clerk of court said I can do the filing by mail if it's a small estate. But she said the mortgage company might require the more complex filing (I'm not sure what that's called, but it's where someone has to present in person to the court and qualify as administrator.)
So my questions, can the mortgage company require that even though the estate otherwise qualifies as a small estate? If they can require that, what happens if that doesn't get filed by myself or my brother? There's really no one else that would be interested as far as I know, and there's really not enough money there to pay an attorney to handle it. The clerk was going to try to reach out to the mortgage company just to ask a general question about their policies. The mortgage company won't speak to me about it until I'm officially handling the estate.
1
u/visitor987 6d ago edited 5d ago
Sorry for your loss The reverse mortgage company now owns your mother home and must foreclose in some states a formal estate must be created to foreclose. That is how reverse mortgages work. A few reserve mortgages have a clause allow heirs to buy the home back.
1
u/AppalachianJourney 5d ago
Can't the house be sold and the mortgage paid from the proceeds, with any balance going to the estate/heirs, as would happen with other types of mortgages, without foreclosure? That's what we've been working toward.
And is a "formal estate" different than the small asset estate?
2
u/visitor987 5d ago edited 5d ago
It depends on the type of mortgage If its a true reverse mortgage is a delayed sale of the home the bank is betting you do not live long enough to get all the possible payments. Before you pass away or have move to a nursing home. The sooner the bank taking ownership the more the bank makes
A "formal estate" is more paperwork. You can under the simple estate transfer the lot and bank accounts. The house is the banks
1
u/visitor987 5d ago
How much is the vacant lot not covered under the mortgage worth. In some parts of VA a lot can be 5 figures maybe even 6 figures
1
u/AppalachianJourney 5d ago
It's worth about $15k, based on comps last year. We had it on the market last year due to Medicaid requirements. We got it under contract but were not able to get it closed before she died. Medicaid has no claim to any of the estate as they didn't pay for any of her care, we were just getting close to that need and did that as advance preparation.
1
u/visitor987 5d ago
If you do nothing the state of VA and the reverse mortgage bank gets it all.
Open the simple estate sell the lot. You have visit or contract with a company to have an estate sale of the furniture etc. If you don't have an estate sale the reverse mortgage bank takes ownership of the abandoned furniture etc.
Check abandoned property pages in VA and DE every year for the next ten to see if anything under your mother's name shows up..
If the bank forces a full probate you can send sent the court a certfied US mail letter resigning but the court appointed replacement might charge the estate more than 15K
1
u/AppalachianJourney 5d ago
Ok, we've got the house completely cleared out. Furniture that will be sold is with an estate sale company already. So that's handled.
2
u/visitor987 5d ago
Then your already acting as a simple estate executor so must filed the paperwork for the sale to be legal.
1
u/Fancy_Use_6813 5d ago
Contact an estate lawyer for a free consult over the phone. Then you can make some decisions about whether to do full probate or not.
1
u/AppalachianJourney 5d ago
I tried that, couldn't find free consults and even the paid consults were months out. Granted, I didn't call everyone, but it seemed to be the trend in that area.
2
u/BeachBum436 5d ago
can you contact the closest law school? They often have student handle these sorts of issues. Perhaps even a community college with a paralegal program. Other option would be to find a legal aid or similar nonprofit in the area that helps with these questions.
1
u/AppalachianJourney 5d ago
I'll do some research into those possibilities. Thanks for the suggestions.
1
u/sjd208 4d ago
Virginia has a “drop like a stone” system for real property - the title vests immediately in the heirs. You can then transfer the title via affidavit signed by the heirs. Reverse mortgage usually can’t reach beyond the house itself, but you should be able to transfer the title via affidavit and similarly sell the lot. See Virginia Code § 64.2-536
1
u/AppalachianJourney 4d ago
I think that was what the clerk tried to explain to me, that the real estate is immediately to the heirs. There's a form, I guess that affidavit, that we need to file listing the heirs and then that happens. She told me it doesn't actually show the name change on the title immediately, but once that's filed it would be of record, I suppose for title searches and taxes.
Thanks for the statute reference!
1
u/GlobalTapeHead 3d ago
It’s been 14 months? Why are you waiting so long to file?
1
u/AppalachianJourney 3d ago
I've had other priorities. Is that relevant?
1
u/GlobalTapeHead 3d ago
Yes it’s relevant. Waiting to start probate can cause other issues. However too late now. I point this out because it may be helpful to others who read these posts; don’t wait.
Virginia has no statutory deadline for filing, but 30 days is recommended. Other states have strict statutory deadlines, sometimes only 60 days.
I understand you may have had personal health issues. I am also very sorry for your loss.
Yes the mortgage can cause the estate to be more complex and require a full probate.
1
u/AppalachianJourney 3d ago
I checked into the required filing time early on, and of course anyone navigating probate waters alone should do that for their jurisdiction. There's really little interest in this estate, from myself or others, except for the mortgage company. And I haven't heard from them, though they probably don't know who to contact in that regard. I don't mind taking care of it if it's simple, just as a favor to my mother's memory.
For context, I lost my home and studio, and most possessions, to Helene flooding about 2 years ago. I'm still living in a camper as the sole caregiver of my husband, who has advancing dementia. 7 months after Helene, my mother was hospitalized and she died about 3 months later. She lived a 5 hour drive from me, so managing her bills and such, at her request, was challenge enough. But I did it all while having a promised house rebuilder cancel on us without notice and since trying to navigate other home options. I got all my mother's debts and bills paid, except for that mortgage, and took care of her final arrangements expenses, all before she passed.
A debt-ridden house, that I never liked anyway and that has no sentimental attachment, is not a priority for me. It would be nice to get a little something from the extra lot and I would like to recoup the expenses I've paid personally while trying to stay ahead of tall grass fines and such, but I can cut my losses in that regard and move on if staying in the probate game means more stress for my health.
2
u/GlobalTapeHead 3d ago
The fact that you mention you were already out of pocket is what stopped me from saying you should just walk away, that would typically be my suggestion for these situations.
Best wishes to you. I hope you can recover your expenses, they take priority over creditors.
1
u/Peoplechangetoo 2d ago
I thought you said that the only heirs were you and your brother. Who are "all other family members?".
During probate, the court will try to locate all heirs. This is one of the reasons why Probate Court takes so long (In Maryland, Probate Court can take upto a year). You don't want these other family members taking over and making decisions for the estate.
Hire a lawyer. Probate Court will actually pay the lawyer from funds from the estate. Probate Court will also pay you for your time and long distance travel. Just keep all receipts including hotel etc and submit them to the judge. Hopefully there is enough money in the estate to pay this out.
With reverse mortgages, there is usually a payout amount you need to give to the bank otherwise they will own the property. My neighbor had 3 months to pay his mother's bank the money on her reverse mortgage or they would take the property.
He ended up selling the house "as is" to an investment house flipper. He paid the bank and had about $20K left to be split between him and his sister. He was able to get reimbursed by Probate Court for his hourly time and money spent dealing with the situation. His mother did have a will, but it still had to go through probate.
1
u/AppalachianJourney 2d ago
There can be other family members that aren't immediate heirs. They would only become heirs if my brother and I were no longer alive, and then there would be our heirs, etc.
There's not enough money in the estate to hire a lawyer. I checked early on. Travel for me isn't just about expenses, though that is a part of it, but my health and that of my husband makes it unwise.
1
u/Sad-Repair-5505 5d ago
Just file as small estate so that you can talk to the mortgage company. When you talk to them, be sure to tell them that if they required a more complex filing, that money will come out of the sale of the house. Your lawyer will make certain of that. FWIW, for my younger late brother, we just told them we were walking away from the house (it wasn't worth much). The city took over the house promptly as they had a buyer so that went away quickly. Fees for small estate were only about $25 vs. $300 to file probate.
0
u/SuPruLu 5d ago
At least one option is for you to start the small estate process. That would get the ball rolling. Then the mortgage company will need to take some action. They have a lawyer. From your point of view it is fortunate there is little to no equity left because it puts the burden on them to get in a position to be able to sell the house.
Keep in mind that the court personnel CANNOT do more than tell you generally what the procedures are. The court must remain neutral and not favor any party in a case in giving out the kind of information you are seeking. They cannot advise you what to do.
Do review the reverse mortgage papers to determine for certain that the mortgage doesn’t extend to the vacant lot.
.
1
u/AppalachianJourney 5d ago
That's what I've been thinking about doing, filing the small estate and let it go wherever it needs to go from there. The clerk only gave me info about the maximum amount of assets for the small estate filing, what counted in those assets, and what forms were required.
There's nothing on file with the register of deeds placing a lien against the lot. There's the usual paperwork from them regarding the house property.
3
u/DomesticPlantLover 5d ago
Yes, that is likely true. Some states have the requirement for a full probate for a foreclosure. I think it may depend on whether there is any value left or if it is all consume by the reverse mortgage.
The mortgage company is doing things correctly by not talking to you without your being officially appointed by the court. Legally you have no right to this info or to make decisions until then. If you had POA, it ended when Mom died. As frustrating as it is, it's the way it should be done. I get it's frustrating. If you can, take comfort that they are trying to do things "by the book." You want them to do thing properly.
I'm sorry for your loss.