I am about to inherit a house in California, but it comes with a mortgage loan. What should I do?

A: The normal rule, under the California probate code, is that you inherit the house with the loan, unless the decedent left a will in which he or she specifically stated otherwise. It means that you would inherit something that may be valuable, but you will have to take the burden of paying taxes and monthly mortgage dues. If you are the new owner, and you can’t afford to pay the mortgage dues, then you will have to decide whether to sell the house, rent it, or live in it and sell your own real property.

Many mortgage loan contracts contain a due-on-sale clause that requires the owner to re-pay the balance due on the loan when the property is sold. However, this clause does not apply when you become the new owner through inheritance, and you intend to live in it. If you plan to rent the house, the bank will likely request you transfer the mortgage loan to your own name.

The heirs do not have to assume a reverse mortgage loan on an inherited house.

Call San Diego estate planning and probate attorney Scott Grossman for a free discussion of your case, and order his free legal book The Insider’s Guide to California Probate and Trust Administration.