Can You Get a Lady Bird Deed on a Mortgaged Property?

Can You Get a Lady Bird Deed on a Mortgaged Property?

Lady Bird deeds, also known as enhanced life estate deeds, have gained popularity in Florida due to their unique advantages in estate planning and property transfer. One common question that property owners in the Sunshine State often ask is whether it’s possible to establish a Lady Bird deed on a mortgaged property. Here’s a breakdown of the key considerations associated with Lady Bird deeds in the context of mortgaged properties in Florida.


Understanding Lady Bird Deeds

Before delving into the specifics of mortgaged properties, let’s discuss what a Lady Bird deed is and why it’s valuable in estate planning and property transfer.

A Lady Bird deed is a specialized type of deed used in Florida that allows property owners to retain full control and use of their property during their lifetime while designating beneficiaries who will automatically inherit the property upon the owner’s death. It’s often employed as a tool to avoid the probate process, streamline property transfer, and protect homestead property. Unlike a traditional deed transfer, the property’s homestead status is preserved during the grantor’s lifetime when using a Lady Bird deed.


Lady Bird Deeds on Mortgaged Properties

Yes, you can establish a Lady Bird deed on a mortgaged property in Florida, but there are essential considerations to keep in mind:

  • Mortgage Lender Consent: While it’s legally permissible to create a Lady Bird deed on a mortgaged property, it’s critical to understand that doing so may trigger the due-on-sale clause in your mortgage agreement. This clause allows the lender to demand full repayment of the outstanding mortgage balance upon the sale or transfer of the property. Consequently, it’s advisable to seek prior approval from your mortgage lender before proceeding with a Lady Bird deed to ensure compliance with your mortgage terms.
  • Homestead Exemption: Florida’s homestead laws provide valuable property tax exemptions and creditor protection for homestead properties. A Lady Bird deed can help preserve these benefits during the grantor’s lifetime. You must maintain the property as your primary residence to continue enjoying these exemptions. If the property is no longer your primary residence, you may lose these exemptions, affecting your property tax obligations.
  • Estate Planning and Asset Protection: Lady Bird deeds are often used as part of comprehensive estate planning strategies in Florida. By designating beneficiaries and preserving control during your lifetime, you can ensure a seamless transfer of your property to your chosen heirs while protecting it from potential creditors.
  • Consult Legal Experts: Given the complexities associated with Lady Bird deeds and mortgaged properties, consulting with legal experts, like the experienced real estate attorneys at Boss Law, is highly advisable. They can provide guidance on the specific requirements and implications of your situation, ensuring that your Lady Bird deed is legally sound and in compliance with all applicable laws.


Boss Law Is Dedicated to Protecting Your Interests in Property Transactions

You can indeed establish a Lady Bird deed on a mortgaged property in Florida, but it’s important to navigate the process carefully. Seek prior consent from your mortgage lender, understand the impact on your mortgage agreement, and ensure that the property maintains its homestead status if applicable. Most importantly, consult with the experienced legal experts at Boss Law to guide you through the intricacies of Lady Bird deeds and estate planning in the context of mortgaged properties. With our help, you can make informed decisions that align with your objectives while safeguarding your property and financial interests. Call us today at (727) 877-3188 for your free, no-obligation consultation.

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