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Dear Quentin,
My mother and father are both on the deed of our family’s land and home.
My mother died in 2005. My father died in 2018. There are three siblings from that marriage: my older sister, my younger brother and myself.
We also have a half-sister from my father. We are not sure if her mother and our father were ever legally married. We are not sure if this half-sister is even truly my dad’s biological daughter.
Another twist: My dad’s girlfriend of 13 years currently lives in the home. She stopped making the payments a while back, and now the house may be going into foreclosure.
Her son wants to swoop in and buy it when it goes into foreclosure. When our dad died, the house stayed in his name. His girlfriend had just continued to make payments, until — I believe — they came up with this foreclosure plan to buy it from underneath my brother.
My sister and I would gladly sign everything over to my brother. Our half-sister is expecting some money, or even the house.
What rights does our half-sister have? Can we open a probate case now to keep the girlfriend from buying the property in foreclosure?
Exasperated Daughter
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Dear Daughter,
Yes. You can and should open a probate case, and deal directly with both an estate-planning attorney and the bank that holds the deed to your father’s house.
First, there’s no guarantee that your father’s girlfriend’s son would end up being the highest bidder. Second, it’s your inheritance. Third, your late father’s girlfriend was effectively paying rent. It’s not her mortgage to repay. It is up to your father’s children to decide whether to keep or sell the house.
Sitting idly by while your father’s former home — your family’s inheritance — slips into voluntary foreclosure so your late father’s girlfriend’s son can pick it up at a rock-bottom price is not an option. Well, it is an option, but one that you would probably all come to regret.
Even if no one in the family has the will or money to take on the responsibility of paying the mortgage, you will get far less for the house if it’s sold in foreclosure. Banks are typically willing to negotiate on repayments if you need time, given that they may lose money on a foreclosure.
As my colleague Jacob Passy recently reported, real-estate investors typically scoop up these distressed properties at bargain prices, and then flip them to make a profit. There would likely be appetite among investors as the number of foreclosures has fallen to record lows.
This plan is an egregious affront to your father’s beneficiaries — his children, including your half-sister, assuming she is legally his child. Come up with a plan together, but first save his home from foreclosure and take responsibility for your father’s estate.
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