Credits, loans, litigation and debts are can also be inherited in the process called probate proceeding. So, one does not only inherit the assets of the deceased, but they can also inherit the credit, debt and litigation. MKC Real Estate wants to share important information with you about a property you are about to inherit.
Debt exceeds the value of the property that is inherited
It often happens that the deceased who is indebted for life in the bank for any type of loan, did not secure the repayment of the loan with an insurance policy so that they can cover it in case of death. In this case, the individual will inherit the debt or the loan. So, the inherited does not only have property rights but also obligations, in this particular case – a debt. It does not sound interesting or tempting at all, but that is the law and it must be respected.
In many cases, the heirs usually are not familiar enough with the procedure, as well as the rights and obligations the heirs have. Acceptance of succession automatically implies acceptance of debts, but only up to the value of the inherited property.
If there are more heirs, they are jointly and severally liable for the inherited debts, each up to the value of their hereditary share, regardless of whether they need to separate it or not. If the division of inherited property executed a debt among the heirs they are divided in proportion to their hereditary components.
Flat on the loan secured by mortgage
The inheritance of liabilities based on loans secured by mortgage bank has available collateral – a lien on real estate. It is also possible to refuse to get the property and the debt and in that case the property will be listed for sale.
Citizens who are the inheritors of the mortgaged real estate and want to continue should pay the whole debt to the bank and become the owner of the property. If that is not what you want, you can easily give up and let someone else have it.
If the loan is not paid, the bank has the right to arrive and make a calculation of debt including the interest rate, and expose you to an additional cost. In order to prevent such a problem, the heir or heirs of property users should contact the bank and sign a contract for the debt. After taking over the obligations under the loan agreement, users can perform early repayment of the loan or, in agreement with the bank, to continue with regular settlement of liabilities due to the scheduled repayment period.
Therefore, in case of death of the borrower, it is urgent to inform the bank about the event in order to find an agreement regarding the further repayment.