Will my father’s estate be responsible for the mortgage on house co-owned with joint tenant?

Q: My father had a deed recorded that makes him and his friend co-own a house as joint tenants with rights of survivorship. He named me as the executor of his will. The property has a mortgage that is only in my father’s name. If there is still money owed on the mortgage when he dies, and his friend gets the house, will his estate get stuck with the mortgage? — Russell

A: When people speak of paying their mortgage, they are really talking about paying the loan associated with the mortgage.

A mortgage is known as a “security instrument” where the homeowner pledges their property as collateral that can be taken to pay the loan or “promissory note” if the borrower stops doing so. A note says, “you got to pay,” and a mortgage adds, “if you want to stay.”

When your father passes, his estate will be responsible for repaying any remaining balance owed on the loan. That said, the house will still be collateral that can be foreclosed if the loan payments stop.

For most people, their home is worth more than all of the remaining assets of their estate. Only assets that remain in your father’s name will be part of his probate estate when he passes.

The house will not be part of your father’s estate because his friend will own it, and most people list “payable on death” beneficiaries on their bank and investment accounts, which would also pass outside of his estate.

If probate still needs to be opened, you will need to inform his lender of his passing, and they may make a claim against the estate.

In reality, as long as payments are still being made, some banks do not bother making a claim because they know they can still foreclose the house to get repaid if need be.

Suppose the bank takes estate funds to repay the mortgage loan. In that case, the estate may be able to recover that amount from your father’s friend, who ultimately benefited to the detriment of your family.

Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a cohost of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.