Selling a House with a Reverse Mortgage in Arkansas: What to Do When the Lender Wants Renunciation Letters

Short answer: You must establish who has legal authority to act for the decedent’s property (usually the personal representative or a surviving borrower/spouse), get a lender payoff demand, clear title, and then close the sale. If the lender insists on “renunciation” letters from heirs, they are trying to ensure no one will later claim ownership or rights—so either the right person must sign, or the probate court must confirm who controls the property. Follow the step-by-step process below and get help from a probate or real estate attorney in Arkansas if things get contested.

Disclaimer

This article explains general Arkansas procedures and practical steps only. It is not legal advice. For advice about your specific situation, consult a licensed Arkansas attorney.

Why the lender is asking for renunciation letters

Reverse mortgage lenders (often FHA-insured Home Equity Conversion Mortgages, or HECMs) need a clear path to repay the loan when the borrower dies, permanently leaves the home, or fails obligations (taxes, insurance, property upkeep). Before approving a sale, the lender wants assurance that all people with potential claims on the property will not later assert rights that would interfere with the lender’s ability to accept payoff funds and clear the mortgage. A “renunciation” letter is one way the lender tries to obtain that assurance.

Key Arkansas legal concepts you need to know

• Authority to sell: In Arkansas, the person who can legally sell real property after an owner’s death is the person with legal title or the personal representative (executor/administrator) appointed by the probate court.
• Probate: If the decedent left a will, the executor named in the will will usually be appointed by the probate court. If there is no will, the court appoints an administrator for the estate.
• Heirs’ signatures vs. court authority: Heirs can sign away claims, but lenders and title companies often prefer either direct heir signatures or a probate order confirming who may transfer title.
• Reverse mortgage rules: FHA-insured reverse mortgages require repayment when the last eligible borrower dies or no eligible borrower lives in the house as a principal residence. The lender will provide a payoff demand and instructions.

Step-by-step: How to proceed in Arkansas

1. Confirm the loan type and lender requirements.

   Call the reverse mortgage servicer. Ask whether the loan is an FHA/HECM and request a written payoff demand and the servicer’s checklist for selling the property. Useful federal resources: HUD’s HECM pages (https://www.hud.gov/program_offices/housing/sfh/hecm) and the Consumer Financial Protection Bureau reverse mortgage guide (https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/).

2. Identify who currently has authority over the property.

   Find the deed and any will. If there is a will, the named executor typically must be appointed by probate court before selling. If there is no will, heirs will need a court-appointed administrator. If a surviving borrower or spouse remains on title with rights under the reverse mortgage, the servicer can explain their options.

3. If needed, open probate in Arkansas.

   Open an estate case in the county probate court where the property is located to appoint a personal representative. With a court appointment, the representative can sign documents required to sell. For court information and forms, see the Arkansas Judiciary website: https://www.arcourts.gov/. If the estate is small, ask the clerk about streamlined procedures that may apply.

4. Ask the lender exactly what type of renunciation they want and why.

   Common lender requests:

   • Renunciation of appointment as personal representative (if someone declines to serve).
   • Renunciation of interest or claim in the property by heirs who will not take title.
   • Affidavit of heirs or heirship documentation when no probate will be opened.

   Get the request in writing. If the lender’s required language is unclear or overbroad, ask them to provide a sample form to avoid unintended rights waiver.

5. Evaluate whether heirs should sign renouncement letters.

   Heirs can sign a limited written renunciation (for example, confirming they will not claim the property once it is sold and the lender accepts payoff). But signing away rights permanently can have consequences. If heirs are unsure, they should consult a probate attorney before signing.

6. Consider using the probate court to resolve disputes or provide formal title authority.

   If an heir refuses to sign or you worry the lender’s renunciation form is improper, ask the probate court for an order approving the sale or for appointment of a representative with authority. A court order usually satisfies lenders and title companies because it settles competing claims on record.

7. Work with a title company or real estate attorney experienced with reverse mortgages.

   A title company will run a title search and tell you what documents it needs at closing. If the title shows multiple heirs, the title company and lender may insist on signatures from everyone who has a recorded interest, or on a probate-court sale order.

8. Close the sale and repay the reverse mortgage.

   Use the payoff statement from the lender at closing. After the loan is paid, obtain a release or satisfaction of mortgage to clear title. If proceeds are insufficient to cover remaining liens, consult the lender about short sale options or HUD loss-mitigation rules for HECMs.

Common scenarios and how to handle them

1. Lender wants renunciations from multiple heirs but you are the executor

Provide the lender with a certified copy of the letters testamentary or letters of administration from the county probate court. These documents show the court-appointed representative has authority to sell.

2. No probate opened, heirs want to sell quickly

Some title companies accept an affidavit of heirship in limited situations, but many will require probate for clarity. Consult the county probate clerk about expedited or small-estate procedures.

3. One heir refuses to renounce or sign

If that heir has a possible claim to title, you will likely need a probate court order authorizing the sale or a partition action if the parties cannot agree. A court order resolves the dispute so a lender and title company will accept the transaction.

Documents you should gather now

• Death certificate for the deceased borrower.
• Copy of the reverse mortgage note and mortgage (if available).
• Written payoff demand and servicer instructions.
• Deed and title history for the property.
• Any will and contact info for potential heirs.
• Communications from the lender showing exactly what they are requesting.

Helpful Hints

• Get all lender requests in writing. Do not sign forms or renunciation letters without reviewing the exact language.
• If you are named personal representative, obtain certified letters from the probate court to prove authority to the lender and title company.
• Ask the lender for a sample renunciation form and a written explanation of why it is necessary—sometimes a probate order or a certified court document will satisfy them instead.
• Contact a HUD-approved reverse mortgage counselor or the CFPB for general guidance on HECMs (https://www.consumerfinance.gov/).
• If the estate is contested or an heir refuses to cooperate, hire an Arkansas probate attorney. A court order avoids later challenges that can derail a sale.
• Keep a paper trail: maintain copies of emails, letters, and signed documents from the servicer and probate court.

Where to get local help in Arkansas

• Arkansas Judiciary: general court information and contacts — https://www.arcourts.gov/
• Arkansas General Assembly (state statutes and legislative information) — https://www.arkleg.state.ar.us/
• HUD HECM information (federal rules for reverse mortgages) — https://www.hud.gov/program_offices/housing/sfh/hecm
• Consumer Financial Protection Bureau guide to reverse mortgages — https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/

Final practical tips

Move deliberately. Renunciation letters can resolve title questions when used properly, but they can also strip heirs of legal rights if signed without understanding the consequences. Where possible, get either a lender-approved renunciation form or a probate court order that clearly authorizes the sale. That approach protects the buyers, the title company, and you from future claims.

If you need help interpreting what the lender is asking or if heirs disagree, talk to an Arkansas probate or real estate attorney before signing anything.