Inheriting a house with a mortgage.

System · 9 July 2017 at 4:41PM

It's a tricky one.

If it was possible to rent it I would keep the house however it is proving impossible.

When I pushed the solicitor as to how once probate was granted the house wasn't changed into my name she said, it would sit titled "under the control of the executors".....not under my name. Simply because I can't take over the deeds cause I can't get the mortgage.

The most logical thing seems to sell. I can't get the 45k to pay and I don't really want it sitting under the control of someone else.

Has anyone any experience where the house they inherited wasn't transferred into their name but stayed in control of executors. It seems rather strange and I didn't even know such a thing could happen yet that's what seems to be going ahead.

Thanks

frugalmacdugal · 9 July 2017 at 4:53PM

Hi,

I'm confused by the fact that there was nothing set up to repay the mortgage if your mother had survived to the end of the mortgage term.

Thrugelmir · 9 July 2017 at 4:55PM

The role and duty of executors is very clearly defined.

What Are An Executor’s Duties?

The executors are responsible for distributing the estate of the person who has died in accordance with the terms of the deceased’s Will. An executor owes a duty to all of the beneficiaries of the estate to administer the estate with due diligence and in accordance with the terms of the Will. This includes:

i) putting the interests of the beneficiaries before those of the executors;
ii) acting reasonably and prudently in relation to the estate property;
iii) taking all proper steps to protect the assets of the deceased;
iv) selling the assets of the estate; and
v) distributing the proceeds of the estate to the beneficiaries.

You should remind them of this.

camptownraces · 9 July 2017 at 4:55PM

I really don't think the executors have any choice but to discharge the deceased's intentions: that her whole estate goes to her son.

The house can't go straight from the estate to the son *unless* the mortgage is paid off. Presumably from the date of death in February the house must have been racking up mortgage interest and repayments for which mother's estate is liable, thereby diminishing any other assets.

If the executors consulted a solicitor and outlined the situation, solicitor's advice would be to put the house on the market for a quick sale before it's repossessed.

AdrianC · 9 July 2017 at 4:59PM

frugalmacdugal wrote: »

I'm confused by the fact that there was nothing set up to repay the mortgage if your mother had survived to the end of the mortgage term.

I'm not.

Even assuming it's not a simple repayment mortgage, where the lifetime of the mortgage repayments provide the exit route, as it most likely is, there are many interest-only mortgages out there without adequate (or, indeed, any) repayment vehicles in place.

G_M · 9 July 2017 at 5:05PM

This really is not difficult - though it may not please you

* the will did not set up a Trust in your name, so the assets cannot be held ad infinitum or until such time as it pleases you
* the Executers must administer the Estate until such tme as Probate is granted, all liabilites are paid, and te Estate is distributed. They cannot just hold onto assets.
* the current mortgage is in the deceased's name. It cannot remain thus. Either the mortgage must be transferred to another name, or paid down. This is a duty of the Executers
* In deciding what to do, the Executers must tae your wishs into account, within the parameters of their duties

It seems
* you cannot afford to pay off the mortgage
* you cannot get a new mortgage in your own name, nor get the current mortgage transferred into your name
* the Estate cannot pay off the mortgage without selling the property

The Executers have no option then but to sell the property, pay off the mortgage and distribute the remains of the Estate (to you).

System · 9 July 2017 at 5:11PM

My mother had 11 years left of the mortgage. She unfortunately passed away completely out of the blue (I know can happen anyone, anytime).

She had life insurance but about 1 year previous either consciously or not decided not to renew it. It may have slipped her mind or maybe she never got around to it but for the previous 10-11 years on the mortgage she has cover.

My aunt asked me what I would like to do with the house. I did initially state of there was a way I could keep it I would. I have been making the mortgage payments up to now so there has been no bills missed hence why nationwide aren't chasing or pushing for decision.

I left it in the power of my aunt to come up with a plan. I know they have a few quid so I was thinking of some form of loan where they would own part of the house until I bought them out. However this didn't come up in conversation.

I have said to them look if it's going to be difficult I'd rather sell. However I think they want to try and help and with it being a delicate situation I dont want to forcefully say sell the house.

My concern is how can my mother's estate be left "under the control of the executors" after probate. They seem to think as well as the solicitor that short term 6-12 months that as long as I'm paying nationwide and the mortgage is being met that nationwide wont push for deeds and a new official owner of the property.

I know this can't go on forever but if I was certain to sell the house at some stage maybe it's best to rent it out short term and then put it on the market.

I'm 25 so I really have never come across this before and hence why I'm letting the executors advise me the best they can.

AdrianC · 9 July 2017 at 5:21PM

cclem345 wrote: »

I have said to them look if it's going to be difficult I'd rather sell.

OK - it IS going to be difficult, since you can't easily raise the £45k.

However I think they want to try and help and with it being a delicate situation I dont want to forcefully say sell the house.

Let's look at it slightly differently...

Don't think of it as "inheriting the house" - because your mother didn't "own" all of it... You are inheriting just under 60% of it. You can either raise the money to buy the other 40%, or sell the 60% you have.

I know this can't go on forever but if I was certain to sell the house at some stage maybe it's best to rent it out short term and then put it on the market.

Honestly? That's the worst of both worlds - you have all the short-term hassle and expense (borrowing the money, getting the house ready to let, finding trustable agents, risking poor tenants, off-shore taxation), without the one thing that may make letting worthwhile - long term capital growth. All you're doing is putting off the inevitable. Either make the decision to let it long-term, or make the decision to sell it now.

Maybe this will help...
Do you actually WANT to be an international landlord? If so, is that the best possible property to let? If you inherited £65k cash, would you think that raising the other £45k and buying THAT property was your optimum investment? Even if, hand on heart, you can say yes to that, it ignores the hassle that usually arises from letting a property you have an emotional investment to - "how dare the tenants treat my mother's house like that?"

gettingtheresometime · 9 July 2017 at 5:27PM

Things are obviously made complicated by the fact you live in Spain so can't get UK based legal advice of your own.

Is the solicitor a joint executor?

TBH I can't help feeling there's a hidden agenda in the Aunt & Uncle coming up with this cunning plan.

frugalmacdugal · 9 July 2017 at 5:29PM

Hi,

worst case scenario, if/when the mortgage company get to know the real situation, can they not just reclaim and auction the house?

As long as they get their £45k they won't care what it sells for.

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Inheriting a house with a mortgage.

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