By Fredrick P. Niemann, Esq. a New Jersey Estate Administration Attorney
When a husband and wife own property as tenants by the entirety (but only one name is on the mortgage) and the husband dies, can the wife legally transfer the mortgage into her own name?
I had this situation come up. In this case, the husband died 3 years previously. The wife notified the bank and they named her as Executrix on the account. She continued making the monthly mortgage payments and no other issues came up. At some point, the bank over collected the property taxes. They informed the wife they could not issue a refund check into her name alone but only back to the estate account of her husband in which she is named Executrix.
How can this issue be resolved? There had not been a need to probate the estate 3 years ago as all remaining accounts were in joint names.
First, my reaction was that I don’t see why the wife would want to transfer a mortgage obligation into her name. If the wife owns the property but isn’t liable on the mortgage, moving the mortgage into the wife’s name would cause wife to take on a substantial debt obligation under the promissory note. If the mortgage isn’t transferred to the wife, then it would be like a non-recourse loan to wife because it can only be collected from the husband’s estate but not from the wife. While I’ve never researched this issue since husband’s legal interest in the property terminated upon death and wife is not on the mortgage, the mortgage isn’t even enforceable against her and only the estate.
I would think the simplest way to get any refund on the surplus taxes would be to probate husbands will. Another option might be to leave the taxes with the bank and have the bank collect smaller installments down the road because less will be needed to fund property taxes.
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