Complicated - mortgage - insolvent estate

michelle198477

First of all, not sure if iv posted this in the right place but here goes....

My partners mum(who we lived with) died Jan2012 and left a 90k mortgage(with ge money) on her house. My Partner is happy to take over this mortgage but we think that the estate is going to be declared insolvent. Does anyone know if we will be able to go to ge money and buy the property from them if the estate is decared insolvent or will it go to an auction.

Thank you for any help

holly_hobby

It is the responsibility of the executor (or administrator if there was no valid will inplace at death), to discharge all debts of the deceased, which in the case of the property will mean selling it for market value.

If the market value of the property & other available capital is less than the os mge, then they will need to mediate with the lender to establish how the lender wants to proceed.

The estate is only insolvent if after the disposal of all assets, there will remain os creditors - debts aren't transferrable so anything os will essentially die with the death of the debtor.

If you can come back with some figs and info re the exectuor and the value of the estate etc, more help can be given.

Hope this helps

Holly

michelle198477

Thanx for your reply, my partner is an executor as well as his brother. The house is worth around 120k , with the 90k mortgage and the other debts we believe it will exceed 120k. We dont mind paying market value for the house(120k) but we are worried that GE money will not offer it to us, not sure how things work after the estate has been declared insolvent but am assuming the house would go back to ge money.

Annisele

How much over £120k are the other debts? And do you have any money of your own for a deposit to buy the house?

With his executor hat on, your partner is responsible for properly distributing assets amongst the creditors. If he sells the house to himself for £120k, he could have a problem if somebody else says the true value was £125k.

The mortgage lender won't really care so long as it gets its own £90k or so. The other creditors wont' care either if they get their money back - so if the total debt is £120k they won't care if you sell the house to yourself for £120k.

If the total debts exceed £120k, the creditors would be bothered about selling at an undervalue. But they'd also have to take a commercial view about whether it was worthwhile pursuing the executor of an insolvent estate.

michelle198477

we currently have 20k which we can use as a deposit if it goes insolvent(if it doesnt go insolvent then we will use that to buy his brother out).we reakon its a very thin line between weather it goes insolvent or not. His mum was in a boundry dispute with the neighbours which we are trying to solve before we are able to sell the house. Depending on how the neighbours want to go decides if the house will be insolvent or not

holly_hobby

The executors have to discharge debts in strict order (notwithstanding funeral costs) they must not deliberately sell assets at under value, if that results in the estate becoming insolvent.

Order of discharge ....
Mortgage
Secured debts
Unsecurd debts
Unpaid utilities, etc

With regards to selling the property, the lender won't have an interest on whom actually buys the property from Mums estate, or what it sells at, as long as the mge debt is wholly redeemed by her executors on disposal - which if your partner buys from her estate for 120k (via a mortgage or by cash), it will achieve.

Do ensure that thorough checks have been made to establish if Mum had any life assurance or other poilcies that may wholly or partially assist with repayment of her os liabilities.

If unsure how to administer this, you may want to consider engaging a probate solicitor to assist and guide ...

Hope this helps

Holly