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Keywords

motionsummary judgmentobjectionmotion for summary judgment
motion

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In re Estate of Griffith, 183 Misc.2d 210, 702 N.Y.S.2d 789, 2000 N.Y. Slip Op. 20048

Facts

Robert E. Griffith was the sole owner of a home in Rockville Centre and opened a line of credit secured by a mortgage on the property before marrying his second wife. After their marriage, he conveyed his interest in the property to himself and his wife as tenants by the entirety. Upon his death, there was an outstanding balance on the credit line, and the executor of his estate rejected the mortgagee's claim against the estate, leading to objections from both the mortgagee and the surviving spouse.

Robert E. Griffith was the sole owner of a one-family home in Rockville Centre that he had lived in since 1946.

Issue

The main legal issue was whether the due-on-sale clause in the mortgage was enforceable and whether the decedent's estate was primarily or secondarily liable for the mortgage debt.

The issue concerns the responsibility for a mortgage on the marital residence.

Rule

The court applied the principle that encumbrances on a decedent's property are not chargeable against the estate's assets at first instance, and that federal law prohibits the enforcement of due-on-sale clauses in certain circumstances, including transfers to a spouse.

It is the express policy of the state that encumbrances on property of a decedent are not chargeable at first instance against the assets of the estate ( EPTL 3–3.6 ).

Analysis

The court determined that the due-on-sale clause was not violated when the decedent transferred his interest in the property to himself and his wife as tenants by the entirety. Since the surviving spouse continued to make payments on the mortgage, the court held that the mortgagee lacked standing to challenge the transfer. The court concluded that the estate was only secondarily liable for the mortgage, as the property itself was primarily responsible for the debt.

If there is no violation of the due-on-sale clause and the underlying loan is currently being paid by the surviving spouse, then there is no default on the obligation. It would seem the mortgagee lacks standing to challenge the transfer and the creation of the tenancy by the entirety.

Conclusion

The court granted the executor's motion for summary judgment, ruling that the mortgage runs with the land and the mortgagee must first look to the property to satisfy the loan before seeking recourse against the estate.

The executor's motion is granted. The cross-motion is denied.

Who won?

The executor prevailed in the case because the court found that the mortgage was primarily the responsibility of the property and not the estate, as the surviving spouse continued to make payments.

The executor's motion granted.

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