Inheriting a Mortgaged Home

LearnerMan1

Hi, I would like understand how the inheritance of a mortgaged home works.
If someone died while still paying a mortgage and the lender wanted their loan paid back in full. There was no life insurance policy in place to pay this loan off. If there was no other money in the estate to pay this off the property would need to be sold. My question is who then decides what price to sell the property? Is it the bank or is it the  executor of the will? Also who chooses the estate agent, the bank or the executor?
Thanks for you help

Browntoa

The executor decides the whole lot

Thrugelmir

Is the property in negative equity? 

The only way to inherit the property is to remortgage and buy the property from the Estate. 

LearnerMan1

The property would not be in negative equity. If it was sold it could pay back the mortgage and also leave a decent bit of money for the family. So the executor would have control of setting the sale price? And the choice of estate agent?
How long would the lender normally give this process to run?
Thanks

getmore4less

As long as the mortgage is getting paid many won't chase for a long time.

They can freeze payments and at some point will show an interest but if active steps are being taken to sell that can be very tolerant.

MWT

LearnerMan1 said:

If there was no other money in the estate to pay this off the property would need to be sold. My question is who then decides what price to sell the property? Is it the bank or is it the  executor of the will? Also who chooses the estate agent, the bank or the executor?

If there is enough money in the estate to keep paying the mortgage then the Executor can stay in control, subject to the general duty to act in the best interests of the beneficiaries of the estate.

If there are no funds to cover the mortgage payments then the Executor needs to the lender to agree a path to a sale and a time-frame.

The lender is likely to be reasonable as they don't want the hassle of dealing with the sale themselves, so foreclosure is unlikely as long as matters are proceeding at a reasonable pace. They may agree to freeze the payments for example, but the interest will keep running of course...

Thrugelmir

LearnerMan1 said:

How long would the lender normally give this process to run?

The Executor(s) need to demonstrate a proactive course of action to firstly obtain a prospective sale then conclude it.  As long as the there's sufficient equity to cover accruing interest then the lender will remain onside. 

LearnerMan1

So the executor deals with the sale of the property and can decide the selling price and also who sells if for them. As long as the lender is kept informed through the process they do not seek foreclosure in any immediate sense.

Thanks for all this 

Cheers

LearnerMan1

In terms of reasonable time frames -
Would the lender be prepared to wait a year for a sale for example? What kind of time frame could be negotiated with a lender? Is foreclosure seen as a last option by lenders then?
Thank you

MWT

LearnerMan1 said:

So the executor deals with the sale of the property and can decide the selling price and also who sells if for them

All of these comments assume that the deceased was the only party with their name on the deeds though and that the will makes no specific directions as to disposal of the property.

Also keep in mind that the Executor is personally liable for the consequences of their actions so they can't just do what they want, like selling the house to themselves for £1 for example... Extreme but just to make a point.

orchid2010

I was executor of my Father's estate and the building society froze the interest (there was only a small mortgage left to pay by the time he died) and the solicitor paid them when the house sold.