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Did the Student Loan Lien Attached to a Lady Bird Deed Pass to Us?

Written by Steve Rhode

Question:

Dear Steve,

My 90 year old deceased father, who had co-signed on a student loan from the Texas Higher Education Coordinating Board, had a judgement placed on his home in 2008 for the defaulted student loan, which my sister and I only recently found out after our father passed away in April of 2016 and we were in the process of selling the home.

To my knowledge, as his POA, a notice was never given to either my father or to myself. I might add that he also suffered from Alzheimer’s and Parkinson’s Disease, so even if he had been served in my absence, he did not have the mental capabilities to understand the information.

The property did have a Homestead Exemption at the time the judgement was filed. In 2009, the property was entered into a Lady Bird Deed which essentially transfers ownership of the property to the designated beneficiaries upon the death of the grantor. My understanding is that the Homestead Exemption expired along with my father and the ownership of the property was immediately transferred to my sister and I.

My question is…since the judgment was against my father and my father died without selling the property to receive a financial gain, does the State of Texas still have a legal right to the judgement amount upon sale of the property since the property now legally belongs to my sister and I.

Can we be held responsible for the judgement?

What are our options regarding this situation?

Thank you in advance for your input.

Ginger

Answer:

Dear Ginger,

You are really asking a question about real estate laws in the State of Texas and there is no way I’m qualified to answer that.

I would implore you and urge you to find a local real estate attorney who is licensed in the State of Texas, make an appointment with them, and get a legal opinion about your situation.

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The State Bar of Texas has a great search form you can use to find a qualified attorney, here.

I’m so sorry you lost your father.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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