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The Impact of Death, Incapacity and Divorce on the Title to Your Home When you purchase a home, you are actually buying the title to the property. Title is the right to occupy, use and ultimately sell the property. Typically, when you close on your home you are granted the right under a deed, with some limited restrictions, to sell, lease or refinance the loans against your property. However, there are a number of day to day occurrences that may cause these rights to use your property to be restricted. Some of these occurrences include the death, incapacity or divorce of the property owners. I. Death or Incapacity of a Property Owner: Just as you received clear title to your property when you purchased it, you must have clear title to your property in order to sell or refinance it. If during the time you own the property any person owning a right to the property dies or becomes incapacitated, the property cannot be sold or refinanced without additional steps being taken. Once an individual with an interest in the property dies, some form of probate or other proceeding must be undertaken to remove the deceased person’s name from title and establish the person(s) or representative(s) who legally possess the authority to sign the title on behalf of the deceased. There are a number of different factors, including the deceased’s will (lack thereof), trust (lack thereof), family history etc., that will dictate the actions to be undertaken to clear the deceased’s name from title. Some of the actions include: 1) Probate of the deceased owner’s will, if valid; 2) If the deceased did not leave a valid will, a more complicated probate that includes determining the heirs of the deceased owner; 3) Affidavit of Heirship. 4) Muniment of Title Similarly, if a person with an ownership interest in the property becomes incapacitated, someone must be appointed to have the authority to transfer title to the property on behalf the incapacitated owner who can no longer do so for him/herself. Such authority may be established through a trust instrument, power of attorney or a guardianship action in a court of law. II. Divorce of Property Owners: A divorce alone does not remove either spouse from title to property. Failure to address which spouse will receive control over the property once the marriage has terminated inevitably leads to lingering disputes in the future. Accordingly, either the final divorce decree or a deed between the divorcing spouses should be drafted to specifically address the rights of the spouses to title in the property. Failure to address these issues will result in confusion and delay down the road when the ex-spouse in possession of the property attempts to sale or refinance. The best course of action is to be informed and understand that these occurrences can impact your ownership in your home. If you are informed and plan properly, with wills, trusts, powers of attorney the impact of these events on your property can be significantly reduced By: Nancy J. Carroll, J.D., LL.M. |
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