What happens to a commercial mortage when the account holder dies?

laydeesian

Sorry this is such a long post! My father died in November and held a mortgage with Commercial First on a business property. The business closed on his death. I'm currently waiting for a Grant of Probate to enable me to deal with my father's estate and Commercial First won't discuss the mortgage with me until I have this (expect to receive this in 5 weeks). They are currently adding a £130 arrears charge to the account each month in addition to the monthly payment and threatening to begin reposession proceedings. What I want to find out is, once we have the Grant of Probate, are we able to pay off the mortgage in a lump sum from my father's estate without having any early repayment charges? Will the additional payments and arrears charges in the 4 months since my father's death need to be paid or just the amount that was owed on the date of his death? Can they repossess the building before we have the Grant of Probate? My father didn't leave a will so we have no authority to deal with his estate until we have this. As this is a commercial mortgage I have been informed by the Financial Services Authority that it is not regulated by them. Any help would be much appreciated! Thank you in advance.

kingstreet

The mortgage payments are still due, despite the death of the account holder, so yes, they will continue to charge interest upto the point of repayment. Arrears fees, if permitted in the mortgage terms will continue until repayment.

If there are early repayment penalties, they can waive them should they choose, but that is a matter for them. I'd say it's unlikely.

They are unlikely to repossess during the period you need to arrange probate, but may consider doing so should the issue become protracted.

You are correct. This is a commercial transaction and the FSA isn't involved in any way.

I assume your father didn't run a limited company? Was there any life cover protecting the mortgage?

laydeesian

kingstreet wrote: »

The mortgage payments are still due, despite the death of the account holder, so yes, they will continue to charge interest upto the point of repayment. Arrears fees, if permitted in the mortgage terms will continue until repayment.

If there are early repayment penalties, they can waive them should they choose, but that is a matter for them. I'd say it's unlikely.

They are unlikely to repossess during the period you need to arrange probate, but may consider doing so should the issue become protracted.

You are correct. This is a commercial transaction and the FSA isn't involved in any way.

I assume your father didn't run a limited company? Was there any life cover protecting the mortgage?

Thanks for your response. No my father was a sole trader and had no life insurance. Is the mortgage covered by the Consumer Credit Act? Could a complaint about the company be made to the Office of Fair Trading?

kingstreet

Commercial lending is not regulated by the CCA either, so no avenue of complaint to the OFT or Trading Standards.

getmore4less

If you were named excutors in the will then I think you can legaly start dealing with estate issues before probate, there are some things that require probate but you should be able to minimise costs and start dealing with the mortgage.


edit: missd the no will bit duh....

Senior_Paper_Monitor

You can communicate as the executor - but the funds of the estate cannot be used until probate is issued - BUT the OP states there is no will, therefore at this point there is no executor!

Not a pleasant situation but b*gger all that can be done at this stage - rules of intestacy/succession will apply and the process may be longer than the OP thinks I'm afraid.

As to the fees/ERC's/penalties - depends on the original contract and the ability to negotiate. Depending on whole estate value may be worth engaging probate consultants (I can provide a reference for one if the OP requires - not a commissionable one to my company or one we have any commercial involvement or interest with. Repossession unlikely to be possible in the circumstances described.