Purchasing Willed Home Without Probate

[Steve Matrix]

Hello,

I will make this as short as I can. Eleven years ago, my dear and beloved parents helped me out tremendously by purchasing a home in which I've lived for just over 11 years now. I had a horrendous business partnership go south, I had to leave my then new home of 3 years and my credit was shot. I borrowed some money from my parents and I matched what they could scrape up for the down payment. The mortgage was in their names only, though I was paying the mortgage, etc all these years.

My father became very ill about 3 years ago and I had both of my parents move in with me in this house so I could provide 24/7 care-giving to my dad. My dad passed August 2019 and I thereafter notified the bank of his demise, asking them to put the loan exclusively into my mother's name. I faxed all required documentation to proceed.

The plan was that I was going to purchase the home from my mother and after having a quick title search completed, a "deed only" transfer was informally initiated. The title company woman told me to pay off the existing mortgage, and email her a copy of the receipt, plus a copy of the mortgage statement. I had paid the low 6 figure payoff in full and put everything in motion to proceed with the deed only, when very unexpectedly my mother passed (just 3 weeks ago). After getting over the initial shock of my mother's sudden passing, I realized that I had to find out what to do as the deed transfer/sale of my home was incomplete. I contacted the lender and miraculously managed to get a refund of the payoff.

My parents have only 2 wills from 1989, naming me as sole heir to the entirety of their "estate." I was not appointed executor and no formal estate was created. My parents had a lot of outstanding bills - many of them accrued while my father was ill (medical bills, etc). It is therefore that I cannot petition the court to become executor of the estate as it would be what is called an "insolvent estate" - the outstanding bills would virtually exceed my home's value.

I contacted the lender again and asked if it would be possible to purchase the property by paying off the loan again, but this time the deed would be recorded in my name internally within the bank. I was somewhat misinformed as initially I was told that it was possible and that I had to wait 5-7 business days to learn more. Today I learned that I could be authorized on the loan, but my deceased mother's name would remain on the deed - no good. The only way that I could be named as loan successor and get my name on the deed, would require a court order and I believe in PA wherein I reside - probate would be necessary.

This brings me to my question and i apologize for the long back-story; I thought it might help to best explain my situation. While on the line with the case agent for the lender, I asked him were I to let the property to go into foreclosure (allowing it to be unencumbered from my mother's ownership), could I THEN purchase the property before it goes to auction?

I've read that PA is a judicial foreclosure state, so it seems the only hope would be if the lender would do a short sale with me before auction.

I am not seeking legal advice here; in fact I will confer with at least one attorney next week. But while I sweat out this weekend any insight would help me to sleep a bit better.

I appreciate any opinions in this sticky situation.

Thanks in advance!

[Tim Winter]

I would not advise mixing your finances with your parents assets/debts until the estate is settled. If they owe more than the assets or equity can cover, then its better to keep those books as seperate as possible (I wouldn't even pay the bills/utilities until the estate has accounts setup for that) as you may need to declare bankruptcy on the estate, and any attempt to use your money until the estate has be settled will muddy the waters, and possibly even cause you legal issues (think fraud or evasion.) 

It would have been best to have a beneficiary deed or the property in a living trust or other entity so as not to be attached to the names of the deceased and thus the debts of the estate, but the time for those is unfortunately passed.

Your best bet I believe is to seek local counsel on your best path forward given the current facts. Each market is different unfortunately, so local legal counsel or asset protection specialists might have other options for you to try.