Selling and Estate, Probate and Reverse Mortgages

If you are currently taking advantage of a reverse mortgage, for the sake of those you will leave behind, I urge you to make sure your affairs are in order and your exectors know the terms of the mortgage agreement. There are only a couple of lenders that offer reverse mortgages and at least one of them has it in the contract that the mortgage must be paid out in full within 6 months of the time of death of the person who owes on the mortgage. 


If you are an executor in such a case, here are some steps you can take immediately to ensure that the terms of the mortgage agreement aren't violated. Get in touch with the legal represenative for the estate and start the probate process as soon as possible. Then contact the designated representative of the lending institution to let them know you have initiated probate.  Probate is the process of ensuring the will is real and was left by the deceased. Once you have contacted the lawyer and the lender (if there is a mortgae of any kind), contact your realtor, (ideally me), to discuss when to list the property for sale. It is important to note that an estate cannot be sold until the will has gone through probate.


The Real Estate Council of BC has advised that properties should not be listed until probate has been granted; however, there is no definite rule about the matter. The important thing to remember is that a property cannot change hands until probate has been completed. This doesn't mean you cannot accept an offer. If you find a buyer who is willing to wait until probate is complete before they become the registered owners of the property, then you can accept an offer before probate is complete. Most lawyers will tell you probate takes 4-6 weeks. However, I have seen it take much longer, so be prepared that it could take several months.


A delayed probate can be problematic when there is a reverse mortgage, or any mortgage for that matter, in which the contract states that in the case of the owner being deceased the mortgage must be paid out within a certain time frame or else they will foreclose on the property. The important thing to remember is that while the lenders will insist on their due, if you are an executor who is making sincere, measurable efforts to settle the estate, and you are keeping the lender informed, the lender will usually find a way to work with you if circumstances beyond your control occur, such as delayed probate. If you find yourself in such a scenario, be sure to contact a Real Estate and/or and Wills and Estates Lawyer for legal advice. 

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