What about the house?

What about the house?

“My mother passed away. What happens to her house? When we try to sell it, the title company or mortgage company won’t sign off on the sale. How do we handle this?” This is a frequent question, and an important one. To respond, let’s briefly review some principles of property law.

According to Texas property law, when an individual owns a piece of real property, formal proof of that ownership is recorded on official government real property records. This formal proof becomes what is referred to as a “chain of title.” The term “chain of title” describes the literal chain that is created as one person transfers property to another person, and so forth.

When a someone passes away leaving real property, that person’s ownership does not automatically transfer to his or her family (unless specific Trust or Deed planning has been done). In other words, that person’s proof of ownership only represents the current link in the above-described chain of title. The next link on that chain of title will not attach until the property is formally transferred to the subsequent owner. That transfer, and the new proof of ownership, must then be officially recorded on government real property records. Of utmost importance, without such a transfer and recordation, real property will be restricted from being sold and being mortgaged (among other things). Ultimately, this means that, if a family member has passed away and left a house, your family will not technically “own” the property for many practical purposes, and will likely be blocked from selling it.

So, how does your family received your loved one’s real property, record the new proof of ownership, and effectively add that next link in the chain of title?

Probate is a very common method of doing so. Probate is the legal process by which a deceased loved one safely and securely transfers property to family members. During this process, any deeds, titles, or other property-transfer documents can be created and filed, effectively conveying the property to your family members. In other cases, where a Trust has been “funded” with such property, it may be possible to deed that property from the Trust to your family. It all just depends on the unique circumstances of each estate and any associated estate plan documents.