What Happens If a Guarantor of a Mortgage Dies ?

In Continental Bank & Trust Co. v. Chemical Bank & Trust Co. (51 NYS2d 903, affd 268 App Div 858, rearg denied 268 App Div 965), the Court was faced with the death of a guarantor of a mortgage and a contractual provision in the guaranty that if the mortgagor defaulted, the guarantor could be sued without first requiring the mortgagee to foreclose on its collateral. The Court held that the mortgagee should look first to the property and to foreclose on its collateral instead of looking to the estate of the guarantor. In Matter of Ryan (44 Misc 2d 477), the court held that a mortgage obligation on property held as a tenancy by the entirety is not an obligation of the decedent's estate. The court wrote, "it would seem that equity and good sense would require that anyone receiving the entire title to the property, whether by descent, devise or as a surviving tenant by the entirety, should take the property in the condition in which it exists at the date of the death of the person who makes their title complete" (supra, at 478).