Selling price of parents' house does not meet the equity release redemption figure

Dogletsmum

Hi, We are in a quandary as my parents took out equity release in 2003. My Dad died in 2007 and my Mum in 2021.  We (my brother and I) have only just managed to sell the house (well in the last stages of), but the equity release has been gathering interest in the meantime and the selling price does not cover what they want.  We have no money to pay for solicitors or estate agents fees which we were hoping would come out of the sale of the property.  Where do we stand, does anyone know?

TheJP

The estate pays the difference. There is no work around, you owe what you owe I'm afraid. Condolences for your loss. 

MEM62

So your parents estate was insolvent?  Who were the administrators?  

If the house is not worth the outstanding equity release balance then the lender is unlikely to get all their money.  What have you solicitors said about where the proceeds of the sale goes?  (Although I am sure they will deduct their fees before distributing the rest.)

Generally speaking, debts are not inherited but if you have meddled with an insolvent estate you may have shot yourselves in the foot.  I am sure than someone with more knowledge than I will be along to comment.     
  

propertyrental

You do not owe anything. Your mother's estate owes the outstanding debt.

If the Estate does not have sufficient money (from the sale + savigs, investments, jewelry, yacht etc) then the equity release company cannot be paid. 

They cannot come after you personally for the money, but they could 'chase' the estateif they believe there is money there (eg that yacht in the Med).

But beware. Where an estate in insolvent the Executors/adminitrators (you)must follow specific rules to ensure no personal liability arises through mis-management.

That includes ensuring you don't sell below market value......

https://www.bereavementadvice.org/topics/probate-and-legal/insolvent-estates/

theartfullodger

TheJP said:

The estate pays the difference. There is no work around, you owe what you owe I'm afraid. Condolences for your loss. 

Sorry for your losses.

And if there is no money left from mum and dad's estate then children, relations, friends of them don't have to pay. The ***** ******  dubious "equity release" will know this.  This won't be the first time a lender like them has lost out:  You do not owe anything.  (Is the cremation/burial/funeral paid for??)

Suggest you go have a chat about this with local Citizens advice - find them here.. 
https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/search-for-your-local-citizens-advice/
(Use your post code rather than the property's one)

- plus maybe a local solicitors who might give a free 15 minute chat. 

What was the formal written agreement with the lender that covered you & brother selling  it please?  Did anyone use/rent/live in the place during the time since dad died, other than mum?

Best wishes and good luck.

ReadingTim

Condolences for your losses. 

Check the equity release documents, as this ought to be covered.  From a quick google it seems you'll either have some sort of guarantee that the estate will never have to repay more than the property sells for, or there will be some sort of insurance policy in place to cover the shortfall.  

You (the beneficiaries) shouldn't have to pay anything, but you won't get anything by way of inheritance either.  

silvercar

Sorry for your loss.

The general advice in this situation is to walk away, let the equity release company deal with the sale etc after all you have nothing to gain.

I also thought that there was a legal requirement that the equity release amount owed couldn't be more than the value of the property.

MobileSaver

Dogletsmum said:

We have no money to pay for solicitors or estate agents fees which we were hoping would come out of the sale of the property. 

propertyrental said:

You do not owe anything. Your mother's estate owes the outstanding debt. ... They cannot come after you personally for the money,

That is normally the case but is that correct for the solicitor and estate agent fees as they will have been appointed by the executor/administrator?

This could turn into quite a mess as the executor should have checked the equity release figure much earlier and realised that there wasn't enough to pay all the bills and so declared the estate insolvent.

Now that they've already "intermeddled" they can't just walk away. Were there any other assets (bank accounts/shares/premium bonds etc.) and if so what happened to the money from those?

user1977

MobileSaver said:

Dogletsmum said:

We have no money to pay for solicitors or estate agents fees which we were hoping would come out of the sale of the property. 

propertyrental said:

You do not owe anything. Your mother's estate owes the outstanding debt. ... They cannot come after you personally for the money,

That is normally the case but is that correct for the solicitor and estate agent fees as they will have been appointed by the executor/administrator?

Correct, the executors will be liable for everybody they've instructed.

As above I had thought the lenders took the risk that they might only be able to get the net proceeds of sale at the then market price, though in theory I suppose it could be higher - depends what era of regulation the loan was taken out in.

Flugelhorn

ideally you would have walked away and let the equity release company advertise and sell the property at their cost 

theoretica

No harm in asking the company to pay the sale costs as they would have needed to do that if they sold themselves. They may of course say 'no' but...