DEAR BENNY: My husband and I own a house. Five years ago, he walked out and literally disappeared. I have tried to find him without success. We didn’t have a lot of money in the bank and, thankfully, he did not take anything. In fact, other than his clothes, it does not appear he took anything else.
I would like to sell, but have been told by a few real estate agents that since he is on title with me, he would have to be found and sign a real estate contract and ultimately the deed.
Obviously, that doesn’t work. Do you have any suggestions? – Annie
DEAR ANNIE: I feel your pain; it’s not something that should happen to anyone. I did a little research and learned to my surprise that in the 1990s, there were between 60,000 and 100,000 missing persons.
I have represented a couple of clients and it’s not an easy process. First, you have to determine if your state has a “determination of death” act. For example, to claim federal benefits, you have to prove that the person was missing – and that you diligently searched – for seven years.
You may be able to convince a judge to allow the house to be sold, with the understanding that half of the proceeds will be held in escrow for the number of years that your state statute requires. However, I am not sure that a title insurance company will be willing to provide title insurance under these circumstances.
One suggestion: When you and your husband first bought the house, I assume you obtained a mortgage, called a deed of trust in most jurisdictions. While I cannot recommend this to everyone, why not stop paying the mortgage and let the lender foreclose? Since you and your husband presumably are on the deed of trust, the lender has the legal right to start the foreclosure process.
If the house has very little equity, and if you are not terribly concerned about the impact this will have on your credit standing, then this may work. I make this suggestion only as a last resort, assuming you can no longer afford the monthly payment.
Talk with a local real estate attorney. I am afraid you may have to wait a couple more years.
But let me change the facts: Your husband is not missing but is in a nursing home with dementia. You want to sell but he is not competent to understand anything. What can you do?
First, hopefully you have taken the advice I often write about, and have a power of attorney signed by your husband when he was competent. That should allow you to sell, although different states have different requirements for powers of attorney. Your local attorney can assist.
If there is no power of attorney, you will have to file a petition to have someone – perhaps you or an adult child – appointed as guardian and conservator over your husband. This requires court action, and the judge will carefully review the facts to make sure you are sincere. There have been too many cases where a relative is appointed conservator for the sole purpose of draining the checkbook.
DEAR BENNY: Two years ago, I borrowed $175,000 for a commercial project I was working on. The lender put a deed of trust (the mortgage document) on my house. It is in first trust position.
The loan was a five-year interest-only transaction, and I am current. Recently, I inherited some money and went to pay off the loan. The lender refused. Is that legal? – Sebastian
DEAR SEBASTIAN: You have a commercial loan, so most consumer protections are not applicable. Most loan documents I have reviewed either state “no prepayment penalty” or spell out the amount of the penalty that will be required for an early payoff. Typically, it is graded, with the amount of the penalty reduced year by year.
In your case, your loan is silent, so I think you have no right to prepay the loan. Prepaying a loan is a privilege and not a right. While I don’t often side with lenders, in this case, they are entitled to the benefits of the deal you entered into.
Of course, the lender may be willing to allow you to prepay at a cost.
Hopefully, you have learned a valuable lesson from this. You – or your attorney – should have negotiated a prepayment before you signed the loan papers. While your lender most likely would not agree to “no prepayment penalty,” it probably would have agreed to some form of monetary penalty.
Benny Kass is a practicing attorney in Washington, D.C. and in Maryland. He is not providing specific legal or financial advice to any reader. He wants readers to e-mail him, but cannot guarantee a personal response. He can be reached at: email@example.com.