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Waiving estate fees for low-income homeowners

Maryland’s probate procedure is likely uncharted territory for most of us. For low-income people with little knowledge of the legal requirements for transfer of inherited real property, the process of opening estates and completing administration, including recordation of deeds, can be daunting, and the associated professional fees and costs associated can be a hurdle to successful estate administration. In the case of inherited real property, it creates uncertainty for the heir and a cloud that could harm future transfers.

The importance of timely transfer of inherited property cannot be overstated. Generational delays can create probate and title nightmares. Heirs who cannot afford to complete the process risk losing the property and becoming homeless.

Senate Bill 466 authorizes the Register of Wills to waive estate fees where real property is inherited by an heir who intends to live in the property but where the estate cannot afford the usual fee because of poverty. This seems like a reasonable approach to address a difficult and important issue.

Consider a common occurrence in Baltimore city. A low-income homeowner dies owning a rowhouse worth $70,000. For the adult child who inherits and lives in the home, the cost of opening an estate can be insurmountable. The Register of Wills fee (not the only cost; there are bond and publication fees to be paid to third parties), is currently $400. While this might not seem like a lot of money, for many in this circumstance it is. Allowing the Register of Wills to waive the fee can be the difference between opening the estate and properly transferring the property or the heir simply continuing to reside in the home without being in title of record.

The failure to transfer title leads to additional significant problems. A low-income homeowner can greatly benefit from the Homeowners’ Property Tax Credit, which helps low-income households afford their property taxes each year. However, an individual can only receive the credit if they are the record owner. Some water utilities will not even speak to someone about their property’s water bill unless they are the record owner of the property and only the owner can access water discount programs. If the home is in need of weatherization or extensive repairs, the assistance programs offered by state and local jurisdictions cannot be accessed by anyone but the record owner.

Many times, mortgage lenders and servicers will refuse to speak with anyone except the personal representative of the deceased borrower’s estate and will not finalize a mortgage modification until a deed transfer to the borrower’s heirs has been recorded. When an estate has no liquid assets, and the family cannot pay the fees necessary to open an estate, the unfortunate result is clients who could have accessed these forms of assistance are turned away and may end up losing their home.

Existing precedent

Typical costs for an estate can include: bond fees between $100 and $400; publication costs between $49 and $213; lien certificate fee of $55; deed recordation fee between $50 and $60; certified mailing fees; and probate fees between $50 and $300 for estates under $100,000. Other fees for things such as obtaining a death certificate may also apply.

The fiscal note that accompanied SB466, which has been cross-filed with House Bill 556, indicated that waiving these fees would have minimal impact on the Register of Wills. These fees may not seem like much, but for a low-income household, they can be an insurmountable barrier.

Precedent already exists in Maryland law for waiving fees for low-income individuals. Maryland Rule 1-325(d) recognizes that filing fees are barriers for low-income individuals’ access to the courts, and it allows court clerks to waive fees for individuals being represented by a legal services organization funded by the Maryland Legal Services Corporation. In order to qualify for these legal services, a client must earn 50 percent or less of the Maryland median income for their household size. Since the legal services programs are already screening clients for financial eligibility, the adoption of the existing filing fee waiver process would benefit Register of Wills clerks who could rely on the legal services programs to determine eligibility instead of being put in a potentially awkward and time-consuming position to make that determination in each case.

SB466/HB556 removes a huge barrier standing in the way of low-income homeowners’ ability to sustain homeownership.

Editorial Advisory Board members John Bainbridge Jr. Wesley D. Blakeslee, and Arthur F. Fergenson did not participate in this opinion.

 

EDITORIAL ADVISORY BOARD MEMBERS

James B. Astrachan, Chair

James K. Archibald

John Bainbridge Jr.

Wesley D. Blakeslee

Martha Ertman

Arthur F. Fergenson

Susan Francis

David Jaros

Ericka King

Stephen Meehan

C. William Michaels

Angela W. Russell

Norman Smith

H. Mark Stichel

 

The Daily Record Editorial Advisory Board is composed of members of the legal profession who serve voluntarily and are independent of The Daily Record. Through their ongoing exchange of views, members of the Board attempt to develop consensus on issues of importance to the Bench, Bar and public. When their minds meet, unsigned opinions will result. When they differ, majority views and signed rebuttals will appear. Members of the community are invited to contribute letters to the editor and/or columns about opinions expressed by the Editorial Advisory Board.

Find out more about the members of the Editorial Advisory Board.