Mortgage debt out of deceased estate?

belisama

My sister recently died unexpectedly. She had a jointly-owned house with her ex-partner. There is also a joint mortgage, and the house is in negative equity. There is no mortgage insurance for this debt.

She has not been with her partner for about 10 years, and has dealt exclusively with the mortgage company, often going into arrears then renegotiating payment terms when she had trouble paying. Her ex-partner hasn't made any contributions since he left, as far as I know.

Obviously he now owns the house and the mortgage. He'll be unable to pay, and will probably sell or have it voluntarily repossessed. Either way, there will be an outstanding debt of up to approx. £20k. I realise that he will be liable for this, but what are the chances of the estate also being liable (there are possibly some funds from an insurance policy)?

Thanks
(also - would this be better in the mortgages section?)

Dox

I'm sorry you have lost your sister and that things are a bit messy in terms of her finances.

If the mortgage is 'joint and several' (i.e. one or both parties are equally liable either individually or together), and he can't pay, the mortgage company can almost certainly look to her estate for any shortfall which arises when the house has been sold.

Stay well clear of this - sounds like an insolvent estate, so don't be tempted to do anything, even if she was your sister. If in doubt, get proper legal advice from a solicitor who has seen all the relevant papers.

belisama

Thanks, that's what I was worried about. (The mortgage is joint and several)
Unfortunately, I have already got involved, so I'll have to plough through, now. Will take advice if it gets too difficult.
The estate isn't insolvent, as the insurance policy will more than cover the debts (that I have found thus far). I was just hoping that the beneficiary (her son, she was intestate) would get something out of it.

So I guess that means the estate can't be distributed until the house is sold? Her ex may decide to keep it, for all I know, and make payments, but it's unlikely. In that instance, how long would I/administrators hold off on distribution?

TonyMMM

What sort of insurance, and does it name the person it pays out to ..?

It may well not be part of her estate, so not liable to be used for her debts.

belisama

Just a general life insurance policy, no named person, so by my reckoning its part of the estate. I'll double check it though.

Nearlyold

You say your late sister owned a house jointly with her ex. Have you established whether this was as Joint Tenants or Tenants in Common? With the latter her share of the house would not transfer to her ex but rather would form part of her Estate.

belisama

Yes, its joint tenants, definitely

Keep_pedalling

Nearlyold wrote: »

That's such a shame, particularly as it could have been changed to Tenants in Common so easily without the ex's agreement and at virtually no cost - too late now sadly.

As the property is in negative equity it would make no difference to the potential beneficiary.

Yorkshireman99

belisama wrote: »

Just a general life insurance policy, no named person, so by my reckoning its part of the estate. I'll double check it though.

You need to ask the company as rules differ widely.

getmore4less

Nearlyold wrote: »

You say your late sister owned a house jointly with her ex. Have you established whether this was as Joint Tenants or Tenants in Common? With the latter her share of the house would not transfer to her ex but rather would form part of her Estate.

Only 1/2 the equity by default.

if in negative equity with secured debt here is nothing to go into the estate but debt.

Marcon

belisama wrote: »

Thanks, that's what I was worried about. (The mortgage is joint and several)
Unfortunately, I have already got involved, so I'll have to plough through, now. Not necessarily. If there was no will and you haven't applied for letters of administration (with you as administrator) you don't have to plough onWill take advice if it gets too difficult. If you are determined to continue, I think you might be well advised to get advice now, rather than waiting until you judge it has become 'too difficult' - might avoid getting to that point
The estate isn't insolvent, as the insurance policy will more than cover the debts (that I have found thus far). I was just hoping that the beneficiary (her son, she was intestate) would get something out of it.If the policy isn't linked to the mortgage, it could fall outside the estate - check with the insurance company

So I guess that means the estate can't be distributed until the house is sold? Her ex may decide to keep it, for all I know, and make payments, but it's unlikely. In that instance, how long would I/administrators hold off on distribution? Worth taking professional advice on the point

Hope the above thoughts may be useful.