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JTWROS aka Joint Tenants with Rights of Survivorship

Jun 06th 2023

Investing in real estate can be a lucrative venture, providing opportunities for long-term financial stability and wealth accumulation. However, it also comes with its fair share of complexities, particularly when it comes to financing. Recently, I encountered just such an example of this; let’s explore a specific scenario involving an investment property held as Joint Tenants with Rights of Survivorship (JTWROS) and the challenges faced after the death of one owner.

JTWROS aka Joint Tenants with Rights of Survivorship

We will delve into the issues arising from a judgment on the deceased and potential strategies, such as debt consolidation, that can maximize the utility of a refinance.

The Situation: Imagine you are an investor who owns an investment property with another individual as JTWROS. Unfortunately, one of the owners passes away, leaving you as the sole surviving owner. At this point, you encounter multiple challenges while trying to navigate the financing aspect of the property, as the mortgage is almost paid off. And it is not in your name.

  1. Debt Consolidation: After handling the initial goal of ensuring that all property documents accurately reflect only the living owner, the primary goal was debt consolidation. To achieve this, you may consider refinancing the property, provided you can secure a favorable loan. Debt consolidation can streamline your finances, improve cash flow, and provide a more sustainable path toward achieving your long-term investment objectives. Many times, this is done with investment properties to secure the down payment on subsequent investment properties.
  2. Judgment on the Deceased: Upon conducting a title search, in this case, it was discovered that there was a judgment against the deceased owner. This judgment adds complexity to the situation. It creates a lien on the property, potentially affecting your ability to secure financing or sell the property in the future. A judgment lien can restrict your options and hinder your plans for debt consolidation or any other financial strategies you may have in mind. In order to circumvent this issue, and avoid waiting for the probate process, we had to work with both the creditor’s attorney and the lender to achieve a result that was amenable to both parties and also take into consideration the desires of the living owner (who had no stake in the debt tied to the judgment).
JTWROS Strategies for Overcoming Challenges
  1. Seek Legal Assistance: Given the intricate nature of the situation, it is crucial to consult with an experienced real estate attorney. We work with great ones and can recommend one if you ever have a need! They can guide you through the legal implications of the judgment lien and provide strategies for resolving the issue. An attorney can help you understand your rights and potential remedies, such as negotiating with the judgment creditor or exploring avenues for removing or reducing the lien.
  2. Explore Alternative Lenders: If you have experienced difficulties with a lender in the past, it may be worthwhile to seek out alternative financing sources. Consider working with a mortgage broker when working with real estate investments, as they know exactly which lenders can work best with your situation and goals. If something unexpected comes up and the lender isn’t able to finance, you do not need to ‘start over’, as your broker can pick up and move everything easily to a lender who can! Brokers often have a better understanding of complex scenarios and can provide more personalized and efficient service, as well.

Financing real estate investments can be challenging, especially when faced with unexpected circumstances like the death of a co-owner, a judgment/lien. However, by seeking expert guidance, exploring debt consolidation strategies, considering alternative lenders, and maintaining open communication, you can overcome these obstacles and achieve your financial goals. Remember, navigating real estate financing requires patience, perseverance, and a proactive approach to finding solutions that work for you.

Sarah Freed is the Mortgage Loan Advisor and Branch Manager that walked hand and hand with the client. Located in Myrtle Beach, South Carolina