Selling a Deceased Owner’s Home Subject to a Reverse Mortgage in Texas

Quick summary: When a homeowner with a Home Equity Conversion Mortgage (HECM, i.e., a reverse mortgage) dies, the loan is generally due and payable. Lenders sometimes ask heirs or potential buyers for signed renunciation or disclaimer letters to confirm that certain people will not claim an interest or try to assume the loan. If the lender keeps requesting renunciations, you have several clear paths: obtain the exact documents the lender wants, use probate (or a court order) to get authority to sell, rely on a trust or transfer-on-death deed if one exists, or negotiate with the lender. The right path depends on title, the decedent’s estate planning documents, and who is willing to sign.

Detailed answer — What’s happening and what you can do

Why lenders request renunciation/disclaimer letters

Lenders request renunciation or disclaimer letters when they want written confirmation that a person named on the deed, a potential heir, or someone with an interest in the property will not assert a claim that could interfere with the sale or payoff of the reverse mortgage. Common reasons include:

• Unclear title (multiple heirs, a surviving spouse not on title, or a separate trust).
• Possible transfer-on-death deed, joint owner, or a beneficiary who might claim the property instead of allowing the sale.
• The lender wants a clean chain of title before issuing a payoff demand or releasing the lien at closing.

Key legal background (plain English)

Under federal HUD rules, a HECM becomes due and payable when the last surviving borrower dies, when the home is no longer the borrower’s principal residence, or when a loan term is violated. For general information on HECMs and borrower-death procedures, see HUD’s HECM pages: HUD: Home Equity Conversion Mortgage (HECM). The Consumer Financial Protection Bureau also has a plain-language guide to reverse mortgages: CFPB: Reverse Mortgages.

Step-by-step practical approach

1. Ask the lender for a written document list and the precise reason for each renunciation. Lenders often accept alternate proof (court order, probate documents, letters testamentary, trustee certification). Get the lender to state in writing exactly what they need and why.
2. Gather core documents: death certificate, deed/title, current payoff demand from the lender, the decedent’s will or trust, any transfer-on-death deed, and contact info for all heirs or interested parties. The lender will need some of these to prepare a payoff and to clear title at closing.
3. Check whether the property is in a trust or has a transfer-on-death deed. If the property is owned by a revocable trust, the successor trustee may usually sell the property without probate by presenting the trust documentation and a trustee’s affidavit. If a valid Texas Transfer-on-Death Deed exists, the named beneficiary may have a nonprobate interest; you will need to coordinate with the lender about that. (For Texas statutes and general probate rules, see the Texas statutes portal: Texas Statutes.)
4. If heirs are willing to sign renunciations: Make sure the renunciation precisely states what it needs to (identity of signer, property description, clear statement disclaiming interest or right to occupy, notarization). Ask the lender to provide a template or approve the language first. Having multiple heirs sign identical, properly notarized disclaimers usually resolves the issue.
5. If heirs refuse or cannot be located: Use probate. Opening an estate and obtaining letters testamentary or letters of administration gives a personal representative legal authority to sell the house despite objections or unsigned disclaimers. If there is no will, the court can appoint an administrator. The court can also order a sale if necessary.
6. If prompt sale is important: Sometimes the estate representative can get a court order authorizing sale and directing how proceeds are distributed. That order will usually satisfy the lender and title company.
7. Consider lender options: Lenders sometimes accept a judicial order, an affidavit of heirship, or proof of trustee authority in place of renunciations. If an heir wants to keep the home, evaluate whether they qualify to assume the reverse mortgage under HUD rules (very limited situations) or can refinance the property.
8. At closing: The reverse mortgage will be repaid from sale proceeds. The lender will release the lien on receipt of payoff. Any surplus funds belong to the estate or the person(s) who own the property per the title or court order.

When a renunciation is not enough — common complications

• If a spouse has homestead rights under Texas law, those rights may require spousal consent or a court order before the home can be sold. Homestead protections are strong in Texas.
• If a deed shows multiple owners or a joint tenancy, the lender may need releases from each owner or a court order.
• Conflicting estate planning documents (will vs. trust vs. transfer-on-death deed) often require probate or a declaratory court action.

When to call a probate or real estate attorney

Talk to an attorney if:

• Heirs disagree about signing renunciations or who should sell the property.
• You cannot locate all interested parties.
• There is a trust, or the title is ambiguous.
• A lender refuses to accept alternatives and you need a court order to resolve rights quickly.

Helpful hints — practical tips to move the sale forward

• Get everything in writing from the lender: a checklist and the exact wording they require for any renunciation or affidavit.
• If the lender gives you sample renunciation language, have all signers use the lender’s form exactly (notarized) to avoid further requests.
• If one heir is holding up the sale and you have authority as executor/trustee, ask the lender whether a certified copy of your letters testamentary/trust certification will substitute for renunciations.
• Obtain a payoff demand early. Payoff amounts change daily because of interest. Knowing the exact amount helps potential buyers and the estate plan the sale.
• If you anticipate disputes or missing heirs, consider filing a small probate petition early so you have clear authority to sell and can avoid months of delay.
• Keep careful records of who you contact and what the lender requests. That documentation helps settle disputes and can be shown to the court if needed.
• If a potential buyer requires clear title, coordinate with the title company. Title companies often have experience resolving these issues and can suggest acceptable documents to clear title at closing.

Resources

• HUD — HECM (Home Equity Conversion Mortgage) information: https://www.hud.gov/program_offices/housing/sfh/hecm
• Consumer Financial Protection Bureau — Reverse mortgage guidance: https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/
• Texas statutes and code library (search for probate, estates, and transfer-on-death rules): https://statutes.capitol.texas.gov/

Bottom line: The lender’s requests for renunciation letters are typically intended to clear title and protect the lender at closing. If heirs are willing to sign the exact language the lender wants (notarized), that will usually solve the problem. If not, opening probate or using a court order or trust documents to show authority to sell will usually satisfy the lender. When in doubt, get the lender’s requirements in writing and consult a Texas probate/real estate attorney to avoid costly delays.

Disclaimer: This article explains general principles of Texas law and reverse mortgage procedures. It is educational only and is not legal advice. For advice about your specific situation, contact a licensed Texas attorney.