Beyond being the emotional cornerstone for many families, the home is often the single largest asset for most Marylanders. Homeownership is one of the most important tools for generating wealth and it is critical to protect that equity – especially in Maryland’s Black communities, which have long been subjected to predatory systems designed to extract wealth and exacerbate the racial wealth gap. Estate planning is one way to protect the family home and pass it on to the next generation.
All too often, the homeowner has passed away without leaving the property to an heir in a will or through a life estate deed – which is a legal document that allows the property to stay in the homeowner’s name during their life and then be passed on automatically to a named beneficiary upon the homeowner’s death. In this scenario, however, the property stays in the deceased homeowner’s name and creates a tangled title, which occurs when a person lives in a house, but can’t prove ownership because their name does not appear on the property’s deed.
Homes with tangled titles are far more vulnerable to being lost through tax sale and mortgage foreclosure. Without a clear title, homeowners generally have much more trouble accessing several financial assistance programs, including the Baltimore City Emergency Mortgage and Housing Assistance Program, the Maryland Homeowner Assistance Fund, the Maryland Homeowners’ Property Tax Credit Program, the Maryland Homestead Tax Credit and other water credit and home repair programs, which are all designed to help prevent the loss of the family home.
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Without access to tax credits, it is much more likely that there will be delinquent property taxes, placing the home into tax sale. Tax sale is the annual auctioning of properties that are behind on property taxes or have certain unpaid housing code citations. In this auction, investors can purchase the debt owed to the city and eventually foreclose on the house if the debt remains unpaid. That same increased risk is true for mortgage foreclosure – without access to government mortgage assistance programs, delinquency grows and grows, culminating in foreclosure. Additionally, mortgage companies are less likely to work with homeowners who are not named on the deed.
The best method to avoid foreclosure and keep your home in your family is preventative estate planning. Recording a life estate deed allows the title to seamlessly pass to your heirs and will allow them to take advantage of all tax credits that could help lower property taxes. If you want to avoid any tangled title issues in the future, or if you are currently facing a tangled title issue, Maryland Volunteer Lawyers Service may be able to help. To find out how, simply complete our online intake application at mvlslaw.org/free-legal-help/ or call our intake phone line at 410-547-6537, Monday through Thursday between 9 a.m. and 12 p.m.