For most couples, their home is their greatest asset and the center of their shared life. Many people dangerously assume that the surviving spouse automatically inherits the property when one spouse dies. While this is often true, it is not guaranteed. Your legal right to remain in your home depends on the fine print of your deed, lease, or loan agreement. These critical housing contracts can expire or become due upon a spouse’s death. This can put the surviving partner in a precarious, heartbreaking position. They may face losing their home while grieving.
Here are 10 types of housing agreements that can put a surviving spouse at risk.
1. Certain Types of Life Estate Deeds
A life estate is a legal tool where an owner transfers property to a beneficiary. However, the owner retains the right to live there for life. Sometimes, a couple might set up a life estate to last only for the life of one spouse. If the surviving spouse is not also a life tenant, their right to live there legally expires when their partner dies. At that point, the beneficiary takes full possession, and the surviving spouse has no legal right to stay.
2. Lease Agreements Naming Only One Spouse
In a rental situation, it is crucial that a lease agreement names both partners. The lease contract technically terminates upon death if it only lists the deceased spouse as the tenant. Many landlords are compassionate in these situations. However, they are under no legal obligation to let the surviving partner stay. They could terminate the tenancy. They might also require the survivor to re-apply, potentially denying them, or raise the rent significantly.
3. “Permissive Occupancy” Agreements for Unmarried Partners
For unmarried couples, the risk is even higher. One partner might own the home while the other lives there without a formal lease. This makes the non-owner a “permissive occupant.” This is not a legal tenancy. The moment the property-owning partner dies, the estate revokes that permission. The home becomes part of the deceased’s estate. The heirs or executor can then ask the surviving partner to vacate, often with very little notice.
4. Some Reverse Mortgages
A reverse mortgage allows homeowners 62 and older to convert home equity into cash. If both spouses are co-borrowers, the loan is not due until the second spouse dies or moves. However, if only one spouse was the borrower, the loan can become immediately due when that spouse dies. The surviving spouse will face foreclosure if they cannot repay the loan in full.
5. Continuing Care Retirement Community (CCRC) Contracts
CCRCs offer a continuum of housing, from independent living to skilled nursing care. Their contracts can be incredibly complex. Some contracts have a specific structure. If one spouse dies or moves to a higher level of care, the survivor must downsize to a smaller unit. In some cases, the hefty entrance fee is structured around both residents. The terms can change significantly after the death of one partner.
6. Certain Rent-to-Own Agreements
A rent-to-own contract is a hybrid between a lease and a purchase agreement. The surviving partner may lose the option to purchase if the contract is only in the deceased spouse’s name. The agreement could be voided. The partner could also forfeit all the extra money paid toward the purchase. The surviving partner would become a standard tenant, at risk of non-renewal.
7. Home Equity Lines of Credit (HELOCs) That Freeze
This doesn’t void your right to the home, but it can cause a financial crisis. Many HELOC agreements have a clause that lets the lender freeze the credit line upon a borrower’s death. This can be devastating if the surviving spouse was relying on that HELOC for living expenses. The sudden loss of funds can make it difficult to afford staying in the home.
8. Homestead Exemptions Tied to a Single Spouse
Homestead exemptions can significantly reduce property taxes. In some states, the application is tied to the age or disability status of one person. The benefit could disappear upon their death if the deceased spouse was the one who qualified. This would cause the property tax bill for the surviving spouse to jump dramatically and unexpectedly.
9. Private Mortgages with a Due-on-Death Clause
If a private loan from a family member financed the home, the terms can be non-standard. Some private mortgage notes include a “due-on-death” clause. This makes the entire loan balance due when the borrower dies. This differs from a standard “due-on-sale” clause. The private lender would have the right to foreclose if the estate cannot pay off the loan.
10. Short-Term Leases with No Survivorship Clause
The type of lease matters, even if it lists both names. A one-year lease is a contract. The landlord has no obligation to renew it with the surviving spouse alone if it expires shortly after a death. The surviving spouse’s housing is only as secure as the time left on the current agreement without a specific renewal clause.
Secure Your Home for the Unthinkable
The security of your home should never be left to chance. All couples should regularly review their deeds, leases, and loan documents together. Ensure that both names are on all relevant contracts. You should also understand the survivorship rights in your specific agreement. Taking these proactive steps can prevent a personal tragedy from becoming a housing crisis. It ensures that housing contracts that expire upon death don’t leave a loved one without a home.
When was the last time you and your partner reviewed the titling and terms of your home’s legal documents?
Read more:
9 Family Loans That Become Legal Nightmares After a Death
9 Personal Documents That Aren’t Legally Yours After You Die
The post 10 Housing Contracts That Expire the Moment a Spouse Dies appeared first on Budget and the Bees.
