A house was left to me in a will. There is a lien on the house. Can I rent it out to pay the loan?

Question

Recently a relative passed away and left me her house in her will. There is a lien on the house from a construction loan. From what my initial understanding is, I cannot take possession of the house until the lien is paid off.

What I would like to do is sell the house, pay off the outstanding debts. Until the market turns around, I would like to rent the house out to pay the monthly loan payment and the taxes on the hosue, and keep the house out of foreclosure. Can I legally do this? We are meeting with a lawyer soon to discuss.

Answer 1

I agree with Skeptica a lien should not keep you from possession a house or moving in. Normally a lien is a document that says you owe someone for a service or a mortgage.

Have the probate ended and the property has been recorded in your name?

If so you and you want to pay this lien off you are now in  a position to secure a small mortgage on the property to pay this lien off. You don't want to get too large of a mortgage that you can not pay with the rent you might get from renting the property.

Say for instance find out what you can rent the place out for. Then get a mortgage where the rent will cover the mortgage, taxes and insurance. This is best because then you will not have to pay any money out of your pocet.

    

If you so desire you may rent the property to anyone you want. This is legal.

I hope the lawyer you are meeting with is the probate attorney. You should also consult with a tax consultant for any tax deductable expenses you might have with renting the place.

I hope this has been of some use to you, good luck.

"FIGHT ON"  

Answer 2

Sounds like a mess.  You usually can not transfer title with the lien outstanding.  Therefore the estate still owns it.  Only the executor can do the renting and selling so you can not legally do that unless the executor grants you permission which may be an unlikely event(perhaps not even possible).

The lawyer can lay out your options but understand that there are legal limits to what you can do and you can only operate within those limits.

You may be even able to transfer title to you subject to the lien but I will guarantee that no lender will loan money on the property with the lien in place therefore the property is almost unsaleable.  Again talk to the lawyer.

If there is no money to be made by accepting the inheritance you can decline the property and escape all the headaches by dumping them on the executor.

Answer 3

You need to talk to a lawyer.  A lien should not prevent you from taking possession or selling the house.  Normally, a lien just gives the lienholder a claim against whatever you get for the house.  You should be able to rent it with no problem.

Talk to a lawyer.  Getting legal advice from anonymous people on the Internet is a bad idea.

Answer 4

That's actually an excellent idea. The amount you would borrow would be the amount of the lien, plus some extra if you want to fix the place up a bit. You should also have extra cash on hand when you're renting out a property for maintenance, repairs, missed rent between tenants, etc.

Also keep in mind that the money you spend to obtain the mortgage (points on the loan), the interest on the mortgage, costs to fix the place up, and costs to actually rent the place out (ads in the paper, for example) are all tax deductible. So, save all your receipts. If you don't currently have a tax preparer doing your taxes, I suggest you hire one next year. I've had the same accountant preparing my taxes for the last 10 years and tax time is a breeze (I just save all the receipts and paperwork, and he does the rest).