Logging out 20 acre lot?

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twofeds
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Logging out 20 acre lot?

Post by twofeds »

Recently inherited property in northern Florida, very rural area on Georgia border. It’s on 20 acres, most of which doesn’t appear to be built upon do to grading issues. It has a small home, and a loan which exceeds what we could reasonably sell the property for based upon today’s market.

Most of the property is full of woods, so I’ve started looking into a forestry consultant, who as I understand it, could look at the types of trees and potential value, then assist in quoting out logging with logging companies. Anybody have any experience with this, I’ve never spoken to a forestry consultant or logging companies.

Long term plan would be possibly doing trailer park type homes on the property or walk away.

Thanks.
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Re: Logging out 20 acre lot?

Post by jimb_fromATL »

twofeds wrote: Fri Jul 13, 2018 10:10 am Recently inherited property in northern Florida, very rural area on Georgia border. It’s on 20 acres, most of which doesn’t appear to be built upon do to grading issues. It has a small home, and a loan which exceeds what we could reasonably sell the property for based upon today’s market.

Most of the property is full of woods, so I’ve started looking into a forestry consultant, who as I understand it, could look at the types of trees and potential value, then assist in quoting out logging with logging companies. Anybody have any experience with this, I’ve never spoken to a forestry consultant or logging companies.

Long term plan would be possibly doing trailer park type homes on the property or walk away.

Thanks.
As a matter of curiosity, how could you inherit a property with a loan outstanding on it? Normally, if the estate does not have enough assets to cover the deceased's debts, the remaining debt cannot be passed on to the heirs.

jimb
Last edited by jimb_fromATL on Fri Jul 13, 2018 10:21 am, edited 1 time in total.
Topic Author
twofeds
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Re: Logging out 20 acre lot?

Post by twofeds »

Property was in a trust when parents passed, so I assume we’ve inherited it even though they haven’t paid it off before dying.
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jimb_fromATL
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Re: Logging out 20 acre lot?

Post by jimb_fromATL »

twofeds wrote: Fri Jul 13, 2018 10:21 am Property was in a trust when parents passed, so I assume we’ve inherited it even though they haven’t paid it off before dying.
I may have been editing my post when you made yours. I added that normally when an estate's assets won't cover the deceased's debts, the lender may not get paid in full in the foreclosure process, but the debt is not passed on to the heirs.

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Pajamas
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Re: Logging out 20 acre lot?

Post by Pajamas »

Would you buy this property today to log and/or develop it? Would you buy it to use it yourself? If not, sell it ("walk away" as you said) and avoid all the hassle.
Last edited by Pajamas on Fri Jul 13, 2018 10:28 am, edited 1 time in total.
bltn
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Re: Logging out 20 acre lot?

Post by bltn »

An loan secured by the property has to be paid off by the sale of the property. Isn t that the concept of collateral?
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twofeds
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Re: Logging out 20 acre lot?

Post by twofeds »

We’ve cleaned out the house and have it on the market to sell, the realtor doesn’t think it will sell at the current price. Lowering the price to where she advises will be less than the outstanding loan. So, it truly is walking away from the parents loan. The idea behind trying to log the property and possibly rent out trailer homes on it is an idea to attempt to keep the land and work with what we have in a way that could pay the loan debt every month.
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Re: Logging out 20 acre lot?

Post by renue74 »

I'm assuming the lumber you are cutting is for pulpwood for paper. Depending the wood, prices are pretty high right now....but it sounds like you're going to be swimming against the current as far as the value.

Why not just let it go back to the bank. To me, it sounds like you're trying to save it, but in reality...will it always be an albatross around your neck? It would be different if it was a 1/2 acre lot in W. Palm Beach on the water.

About 5 years ago, my dad bought a little lot in Arkansas that was marketed as an "investment" that he could sell to new home buyers who would eventually flood the area. It's not happening....so he's saddled with this "investment." At some point, it's not worth it to pay the $500/year property taxes on this lot.
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flossy21
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Re: Logging out 20 acre lot?

Post by flossy21 »

A couple of other ideas...

Look into renting out or selling the gas/mineral rights depending on the location.

You might also be able to rent to hunters who want a private hunting preserve.
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Re: Logging out 20 acre lot?

Post by Pajamas »

twofeds wrote: Fri Jul 13, 2018 10:34 am We’ve cleaned out the house and have it on the market to sell, the realtor doesn’t think it will sell at the current price. Lowering the price to where she advises will be less than the outstanding loan. So, it truly is walking away from the parents loan. The idea behind trying to log the property and possibly rent out trailer homes on it is an idea to attempt to keep the land and work with what we have in a way that could pay the loan debt every month.
If the property isn't worth as much as the loan on it, there are good reasons why. Sounds like a lot of work with poor prospects of return and a risk of greater loss. Once you log it or have trailers on it, it's going to be worth even less.

Twenty acres of timberland is nothing special in that region.
Ruger
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Re: Logging out 20 acre lot?

Post by Ruger »

I logged part of my property many years ago, so I don't remember the details. First, check with the county and the state before you do anything. The state insisted that we had a stream on our property and that we could not log around it and had to take precautions. Only problem was there was not a stream on our property and never had been. That was a joy to sort out. Then the property was in forest deferral and had to be replanted. So make sure you know about that stuff before you go any further. After that we contacted a logging company directly and they came out and told us what trees they wanted. We made sure to not have the trees directly around the house logged because logging leaves a big, unsightly mess behind. Keep a watch on them though, the loggers accidently cut down two big fir trees off of our neighbors property. They weren't pleased but didn't make an issue of it.
If you are going to try to sell it, I wouldn't log it. The mess and loss of trees could and probably would be a turn off to potential buyers.
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Re: Logging out 20 acre lot?

Post by Northern Flicker »

twofeds wrote: Fri Jul 13, 2018 10:34 am We’ve cleaned out the house and have it on the market to sell, the realtor doesn’t think it will sell at the current price. Lowering the price to where she advises will be less than the outstanding loan. So, it truly is walking away from the parents loan. The idea behind trying to log the property and possibly rent out trailer homes on it is an idea to attempt to keep the land and work with what we have in a way that could pay the loan debt every month.
If the timber on the land is worth enough to make the property worth more than the loan, why won't the property sell for more than the loan?
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Re: Logging out 20 acre lot?

Post by Morse Code »

I own a 60 acre deer hunting property and I had it logged in 2016, so I have some experience in the matter.

Based on what you've said, I would market this as a hunting property. That's probably the best use of it and will give you the most value. Hunter's will want to log it as soon as possible to improve the habitat. You could make more money by logging it yourself and then selling it, but just selling it and letting the new owner manage the timber sale will be a lot easier for you.
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twofeds
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Re: Logging out 20 acre lot?

Post by twofeds »

We explored the hunting option, through a local contact got a rough price of $5/acre/year. So, hunting alone isn’t going to offset the current mortgage payment.
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Re: Logging out 20 acre lot?

Post by Morse Code »

I'm not suggesting leasing to a hunter. I'm suggesting selling to a hunter. A hunter will give you the highest price if it's not valuable for development, but decent wildlife habitat. There are real estate brokers that specialize in marketing hunting properties. https://www.whitetailproperties.com/
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Re: Logging out 20 acre lot?

Post by KyleAAA »

If you cut the trees, it will decrease the value of the property. So it's a long-term play, since if you can't sell it for enough to pay off the loan today, after logging it will take you even longer. You can cash out a pretty nice lump sum in the meantime, though. Could you try renting the house instead of selling?
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Re: Logging out 20 acre lot?

Post by Jack FFR1846 »

I forest manage my own property for firewood production.

First, easy, free step is to call lumber mills local to the property and ask in general what they're paying. For a local place, you could likely tell them where the property is and they're going to have enough info to give you a ball park answer in $/board feet. Be prepared for them to potentially tell you zero. I've had this happen. I'd think in Florida, you're not going to have my option of producing firewood, because.....well....you're not getting any "real" winter.

If the trees on your property are indeed of value, then sure, call in a forester. I've found that they're not expensive and quite knowledgeable. They're also going to know the laws around what you can/can't do.

But if you do log the property and later want to sell it, you're likely going to decrease the property value by far more than you'll take in unless you've got 20 acres of 100 year old black walnut or something.
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Jack FFR1846
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Re: Logging out 20 acre lot?

Post by Jack FFR1846 »

Morse Code wrote: Fri Jul 13, 2018 12:31 pm I'm not suggesting leasing to a hunter. I'm suggesting selling to a hunter. A hunter will give you the highest price if it's not valuable for development, but decent wildlife habitat. There are real estate brokers that specialize in marketing hunting properties. https://www.whitetailproperties.com/
20 acres isn't big enough to hunt on. It's barely big enough to legally shoot a firearm in my town.
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Re: Logging out 20 acre lot?

Post by Morse Code »

While it may seem logical, logging the property will not necessarily decrease it's value. That largely depends on the timber itself. If you have low-value, mature timber, logging it will actually increase the land value to a hunter. I've heard many deer hunter/owners complain that they can't get loggers to come and cut their timber for free and they desperately want it gone.
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Re: Logging out 20 acre lot?

Post by Morse Code »

Jack FFR1846 wrote: Fri Jul 13, 2018 12:59 pm
Morse Code wrote: Fri Jul 13, 2018 12:31 pm I'm not suggesting leasing to a hunter. I'm suggesting selling to a hunter. A hunter will give you the highest price if it's not valuable for development, but decent wildlife habitat. There are real estate brokers that specialize in marketing hunting properties. https://www.whitetailproperties.com/
20 acres isn't big enough to hunt on. It's barely big enough to legally shoot a firearm in my town.
It's definitely not ideal, but thousands of hunters harvest deer every year on smaller parcels. Rifles are not the only legal hunting weapon.
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Re: Logging out 20 acre lot?

Post by not4me »

Not sure it matters a lot, but in thinking of options I realize I'm still confused as to the status & how this came about. Whose name is on the loan/deed now? If you, then won't walking away create some issues for your credit, etc? If not, can you really sell timber or land?

I'm guessing from your description this is mostly pine & there is plenty of alternative places to hunt nearby. Agents that mostly sell houses might not be best source for knowing timber, but in this case they likely have a good idea. Were you thinking you might harvest the timber before walking away? Again, whoever holds the loan might have recourse....

The gap between what you expect to clear from the sale & the loan ( & really terms of loan) might give an indication as to other options. If fairly close, someone on adjoining property might be willing to step in to avoid something worse. I assume loan held by a company...have you talked to them about options?
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Re: Logging out 20 acre lot?

Post by Jack FFR1846 »

Morse Code wrote: Fri Jul 13, 2018 1:17 pm
Jack FFR1846 wrote: Fri Jul 13, 2018 12:59 pm
Morse Code wrote: Fri Jul 13, 2018 12:31 pm I'm not suggesting leasing to a hunter. I'm suggesting selling to a hunter. A hunter will give you the highest price if it's not valuable for development, but decent wildlife habitat. There are real estate brokers that specialize in marketing hunting properties. https://www.whitetailproperties.com/
20 acres isn't big enough to hunt on. It's barely big enough to legally shoot a firearm in my town.
It's definitely not ideal, but thousands of hunters harvest deer every year on smaller parcels. Rifles are not the only legal hunting weapon.
Ah.....I hadn't even thought of bow hunting.

I'd think that they'd have to be in a tree stand. Walking 20 acres, covering it really well could easily be done in an hour.
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Rupert
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Re: Logging out 20 acre lot?

Post by Rupert »

Have you tried selling it to the adjoining property owners? (FYI: I know that part of the world quite well. There's nothing there but scrubby timberland and a federal prison.)
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Re: Logging out 20 acre lot?

Post by alpenglow »

I own a 40 acre timber lot in New England, so I can comment in general but not specifically about your region. I've found that the quality of forestry consultants and loggers varies greatly. Unfortunately, I've seen some land absolutely wrecked by unscrupulous loggers that have no respect for the land, causing significant damage to the value of the property. If possible, I would suggest talking to the locals for suggestions. Based on recommendations from my neighbors, I switched to a new consultant that is miles ahead of the last guy I had. If there are wetlands and/or streams on the property, make sure your consulting forester knows the rules and drafts a logging contract that reflects those rules. Wetland violations can be severe. Good luck.
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Re: Logging out 20 acre lot?

Post by mouses »

That's a lot of wildlife habitat that you'd be destroying by logging. Think of the poor animals.
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Re: Logging out 20 acre lot?

Post by dirtlaw »

Twofeds,
I once had that same idea and got cash from a logging company who came and cut timber (mostly pine) on a commercial property and then, when starting construction, had to pay a sitework contractor more money than I earned to dig up the stumps. The sitework contractor told me it would have been much cheaper to clear the site if the trees were still standing and they could have pushed them over with a bulldozer AND they would have given me a credit for the price they got from the timber! :oops:
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Re: Logging out 20 acre lot?

Post by twofeds »

Couple of additional details based on the comments and suggestions (Thank you very much for all the information):

1) Property has a residential loan with a bank in parents name, we are not on the loan.
2) We created a trust, which was signed before their death, and moved the house into the trust before their death. I don’t know how that affects the loan, but our names are not on the loan.
3) Potential for resale is drastically lowered by the power company putting in two different power transfer stations next to and across from the property.
4) We are currently renting out the house (friend of the deceased parents) it was being rented before they passed, but it’s for $700/mo less than the loan payment.

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Pajamas
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Re: Logging out 20 acre lot?

Post by Pajamas »

So since it's worth less than the mortgage balance, see if you can just hand the keys over to the mortgage holder and walk away. Might want to talk to a lawyer about that considering everything involved including the trust and property taxes, etc. Seems like the easiest and perhaps most financially beneficial solution.
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Re: Logging out 20 acre lot?

Post by not4me »

twofeds wrote: Fri Jul 13, 2018 3:24 pm Couple of additional details based on the comments and suggestions (Thank you very much for all the information):

1) Property has a residential loan with a bank in parents name, we are not on the loan.
2) We created a trust, which was signed before their death, and moved the house into the trust before their death. I don’t know how that affects the loan, but our names are not on the loan.
3) Potential for resale is drastically lowered by the power company putting in two different power transfer stations next to and across from the property.
4) We are currently renting out the house (friend of the deceased parents) it was being rented before they passed, but it’s for $700/mo less than the loan payment.

Twofeds
Twofeds, I know I'm not really addressing your original question. To that I'd basically say if it were me, I wouldn't go there yet as it seems to me there are some sticking points. This is over my pay grade, but I'll give you a flavor for what ran through my mind. If you are (or were) either the executor for the estate or the trustee for the trust, I'd talk to a lawyer for sure. Some of this may depend on Florida law (assuming estate is in Florida?) &/or type of trust, timing etc

I would have expected when the property was re-titled into the trust, the loan would have had to be re-done. Were there other assets moved into the trust that were to serve as collateral? Have the loan payments been coming from the trust? If so, there must be other assets the lender will come for when there is a default. Do the renters have a lease with the trust? But either way, I would think the lender would call a halt to any potential sale & might have something to say if you remove assets (like timber) in anticipation of defaulting on the loan.

This may be smoke & I hope someone else more knowledgable than I would weigh in. Guess I'm trying to warn of potential negative impact on your personal assets.
NotWhoYouThink
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Re: Logging out 20 acre lot?

Post by NotWhoYouThink »

The loan is owed by the estate, right? So if there are enough assets in the estate to pay off the loan, even if those assets include something besides the property, the debt gets paid first. Maybe, unless Florida is a non-recourse state, and the property is listed as the only collateral on the loan. Then maybe defaulting on the loan is an option. Sounds like more data gathering is needed.
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Re: Logging out 20 acre lot?

Post by retiredjg »

There is a fair amount of National Forest, State Forest, State Park, Military Reservation. and maybe even some National Park Service land in the Florida panhandle. If any of that is close to you, you might be able to get out from under your burden by donating the land for conservation purposes. Or selling it cheap.

There is also the Nature Conservancy although I don't know if they would be interested in a parcel that small - but they might if anything else is close by.
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Re: Logging out 20 acre lot?

Post by mhadden1 »

In 2016 I helped my mother sell the timber on 75 acres in east-central Ga. so I have some recent experience. It can be hard to interest a logger/timber buyer in small tracts like 20 acres unless it's very high volume/value. Sometimes a small tract can be done while logging an adjacent tract. A clear cut of 20 acres of pretty good timber might bring, I am guessing, 30k or so. A forestry consultant will help figure out the prospects, if any.

A 20 acre parcel in a typical rural area in north Fl. (not surrounded by a subdivision etc) can definitely be hunted in any fashion. Cutting or clear-cutting timber can enhance game habitat. A clear cut in this area, particularly when replanted, will be densely wooded again in 20 years.
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Re: Logging out 20 acre lot?

Post by Hockey10 »

Rupert wrote: Fri Jul 13, 2018 2:06 pm Have you tried selling it to the adjoining property owners? (FYI: I know that part of the world quite well. There's nothing there but scrubby timberland and a federal prison.)
+1

I once owned some land in NC. I was finally able to sell it by knocking on the door of the adjacent homeowner. I was lucky, as most of the lots in that neighborhood were vacant. It ended up being a terrible investment, and if the lot next door did not have an eager buyer, I might still own it today.
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Re: Logging out 20 acre lot?

Post by IowaFarmBoy »

You should also look into whether the bank has a security interest in the timber, i.e., whether they will have first lien on the proceeds from selling the timber. You may need to turn the proceeds over to them. ( I did a quick google about this idea and it looks like this is commonly included in areas with significant timber harvesting but that it may not be the case everywhere.)
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Re: Logging out 20 acre lot?

Post by carolinaman »

DWs family owns 21 acres in central NC, a prime timber area. Lot full of mostly pines. It has been harvested twice in past 20 years. The timber revenue would barely pay the taxes until time for another harvest. I think the family got a few thousand dollars each time harvested. So if you are think a trailer park, the timber harvest may help pay for clearing the land so that is would be suitable for a trailer park. There is a lot to consider beyond just harvesting the timber to make it suitable for a trailer park and probably a lot of expense as well. If you want to go in that direction, do your research before deciding to do it. Your findings may dissuade you from that idea.
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Re: Logging out 20 acre lot?

Post by Northern Flicker »

Pajamas wrote: Fri Jul 13, 2018 3:38 pm So since it's worth less than the mortgage balance, see if you can just hand the keys over to the mortgage holder and walk away. Might want to talk to a lawyer about that considering everything involved including the trust and property taxes, etc. Seems like the easiest and perhaps most financially beneficial solution.
Yes, formally offer the mortgage company the deed in lieu of foreclosure. They save the cost and hassle of foreclosing. If they accept the offer, you are done.
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Re: Logging out 20 acre lot?

Post by dekecarver »

mouses wrote: Fri Jul 13, 2018 2:22 pm That's a lot of wildlife habitat that you'd be destroying by logging. Think of the poor animals.
Unfortunately, unmanaged forest eventually turns sterile to some degree. Responsible land management is imperative to healthy wildlife growth.
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Re: Logging out 20 acre lot?

Post by jimb_fromATL »

jalbert wrote: Sun Jul 15, 2018 1:25 am
Pajamas wrote: Fri Jul 13, 2018 3:38 pm So since it's worth less than the mortgage balance, see if you can just hand the keys over to the mortgage holder and walk away. Might want to talk to a lawyer about that considering everything involved including the trust and property taxes, etc. Seems like the easiest and perhaps most financially beneficial solution.
Yes, formally offer the mortgage company the deed in lieu of foreclosure. They save the cost and hassle of foreclosing. If they accept the offer, you are done.
twofeds wrote: Fri Jul 13, 2018 10:34 am We’ve cleaned out the house and have it on the market to sell, the realtor doesn’t think it will sell at the current price. Lowering the price to where she advises will be less than the outstanding loan. So, it truly is walking away from the parents loan.
An estate or probate attorney seems in order first.

It sounds like the probate and/or estate settlement process has not been started yet. Putting the property in a trust did not make the mortgage debt magically go away. The borrower was still personally responsible for the debt, and their estate is still responsible for all the deceased's debts after they die. So the estate (and by extension the heirs) cannot just "walk away" from the loan.

A deed in lieu of foreclosure is a shortcut that eliminates the legal hassle of the lender having to go through the formal foreclosure process. It is loosely based on the principle that you cannot get blood from a turnip (which is also the main reason Robin Hood robbed from the rich -- because the poor didn't have any money.)

A deed in lieu will more likely be accepted if the lender knows for sure that there are no assets available to pay the debt. If the estate has any other assets such as property of significant value, cash in bank accounts, etc. then the lender has no reason to accept the deed in lieu of foreclosure.

While the lender probably does have to allow a family member heir to assume the mortgage (under the rules of the Garn-St. Germain law), they are not likely to agree to accept a loss via a deed-in-lieu in favor of letting the heirs get more of the estate's other assets.

Since Florida is a recourse state, all the more likely that if the estate does have enough assets, the lender would choose instead to foreclose, then possibly sue the estate, administrator/ executor/ personal representative, and the heirs for any deficit. (If the estate does not have enough assets to cover the debt, then the lender cannot pursue the heirs. It's just that the heirs cannot receive any of the deceased's assets before all the debts are paid.)

After talking with an estate/probate attorney and completing the process of inventorying the estate's assets and liabilities, you'll have a better idea of whether there are enough other assets to make it practical or possible to try to assume the mortgage and keep the property.

By the way ... you probably cannot legally harvest the timber without the lender's approval either now or after you formally assume the mortgage debt, since you would be reducing the value of the property that is pledged as collateral for the loan. More reason to talk to a lawyer and read the fine print of the mortgage contract and Florida law first.

jimb
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