Q: My grandmother passed away about a year and a half ago and left behind her townhouse. Last week, I was served with a lawsuit the bank filed to foreclose her mortgage. I called the bank’s lawyer and explained that I had nothing to do with the property and never signed anything. She told me I had to be named as I was one of my grandmother’s heirs. Should I be concerned? — Anne
A: When your grandmother passed away, her townhouse passed to her heirs. Depending on the circumstances, you could be one of her heirs and potentially have an interest in her property.
Because her mortgage is not getting paid, her mortgage lender filed a foreclosure lawsuit and has identified you as a potential heir. In a foreclosure suit, the lender will have to name everyone with even a potential interest in the property and “foreclose” their ownership interest in the property. It does this to get a “marketable” title to the property so it can sell it and recoup the money it lent your grandmother. Even though you are not the borrower and did not sign the paperwork, you were included in the lawsuit due to your potential ownership interest as an heir.
Because you are just an heir and not the borrower, the lender can only take back any ownership interest in the property you may have — it cannot get any money from you. In fact, if the property has any equity, you may even be able to get some money from it. You may be able to sell the property, pay off the bank, and keep the remainder. However, this may require you to probate your grandmother’s estate and cooperate with any other heirs. Even if doing all of that is not feasible in your circumstance, if the lender is outbid at the foreclosure sale, you and any other heirs can claim the extra funds from the process, known as the “surplus.”
You should be concerned any time you are served a lawsuit or sent any legal papers. Lawsuits are time-sensitive, and you should consult an experienced local attorney to review the lawsuit and learn about your rights and obligations.
Board-certified real estate lawyer Gary Singer writes about industry legal matters and the housing market. To ask him a question, email him at gary@garysingerlaw.com, or go to SunSentinel.com/askpro.