deceased parents uninsured mortgage

tinytank

hi, our situation is our mum died suddenly last summer and she had a small mortgage on her home (67,000).
my mum had a life insurance policy from the bank when she took out the mortgage but she cancelled it summer 2011, the bank allowed her to cancel the policy as they said the value of the house was greater than the value of the mortgage.
my brother has always lived in the house (23yrs) and still lives there, he is trying to take over the mortgage as it was uninsured.
My query is who legally owns the house and is this the correct or only course of action he should take? any insight would be helpful , thanks.

dotsman

Firstly, my condolences regarding your mother.

With regards the ownership of the house, the solicitor in charge of executing the will would be the best person to advise.

From a high level, the way I would see it is that the house is part of her estate. However, so too is the outstanding debt. Therefore, if there are insufficient other funds in the estate to cover the debt and your brother is unable to take on the debt himself, then the bank is entitled to sell off the house to cover the debt and the balance of the sale is added to the estate. With regards your mother cancelling the insurance, I assume your mother was over 50 years of age, so there is no issue there (life assurance/mortgage protection is only compulsory for people under 50).

Perhaps others here may be able to clarify the actual process (or perhaps on the legal forum), but the solicitor would (or at least should!) be the best person to advise.

ravima

Your Mother's Will is the critical document here.

Who did she leave the house to?

If she left no will, then the rules of intestacy apply and as dotsman says, solicitor is the best place for advice.

Outstanding mortgage must be repaid to bank. They are entitled to it.

tinytank

thanks for the replies, its good to get some information, we have already had to spend so much covering the funeral costs ourselves that having to pay more money to a solicter is not an option at the moment, my mother was only 45 when she died, so they shouldn't have allowed her to cancel her insurance..? and also she had no will either, so her estate is inestate.

P. Breathnach

I'm sorry about your loss, and the difficulties you now have to address.

You don't mention a father. Is he alive?

If he is not part of the picture, the house and all other property pass in equal shares to all children, but any debts must be paid (funeral expenses, mortgage, anything else). Those debts take priority over anybody's right to inherit.

A mortgage can not just be "taken over" by your brother, yourself, or anybody else. You need to go through the legal steps to have somebody put in charge of the situation. That could be you, or your brother, or another family member. It's technical stuff, but not beyond a reasonably sensible person who is willing to put in a bit of work.

If your brother has an income, and all the family agree to it, it might be possible for him to get his own mortgage on the property and continue to live there. But it's not a foregone conclusion, and there are several months of work and bother in store for you.

Gael23

P. Breathnach wrote: »

A mortgage can not just be "taken over" by your brother, yourself, or anybody else. You need to go through the legal steps to have somebody put in charge of the situation. That could be you, or your brother, or another family member. It's technical stuff, but not beyond a reasonably sensible person who is willing to put in a bit of work.

If your brother has an income, and all the family agree to it, it might be possible for him to get his own mortgage on the property and continue to live there. But it's not a foregone conclusion, and there are several months of work and bother in store for you.

This is a complicated legal situation as their is an outstanding mortgage. If the bank agree to him taking the mortgage into his name then all siblings just need to agree for him to live there.
You need to speak to a solicitor together to find a solution.

handlemaster

Condolences to you and your family on your loss. Just a word of advice from going through similar. Agree rates with your solicitor before commencing work on the will, they can take a percentage value of the assets . YOU DONT have to use the solicitor that the will was made with. It could end up costing you alot more than youd ever imagine. Solicitors I have found out from experience are out to get as much as they can off you for their service regardless of personal hardship you are going through. Best of luck:

alig123aileen

I am so sorry to hear about you losing your mum when she was so young, and am sorry to hear of the dilemma you find yourself in. My background is dealing with the Financial Regulator/Insurance Ombudsman and I believe you may have a case against the bank. When your mum took out the policy it was probably part of the terms and conditions that she took out the policy to cover the mortgage and when that happens the bank assign the policy to themselves and that means they own the policy in the event anything happens to the life assured. I think you have a valid case to say that your bank misadvised your mother to cash in the policy on the basis of the value of the house had exceeded the mortgage amount. What the bank should have done is reduced the sum assured on the policy to the outstanding mortgage and given your mother a surrender value based on the excess sum assured and kept the policy in the event of her death. Your mother did not receive proper financial advice from the bank and if you can prove this you may well win the case. As your brother is resident in the house he has no doubt some legal status and cannot just be thrown out even if as a previous post says the debt is made against your mums estate. I am happy to meet with you or talk with you by phone and help you prepare your case for the Financial Ombudsman. It will cost you nothing except for some time and is definitely worth a try. My experience is that banks will try to get as much from you if they can but they back off when you do a bit of research and question them with well researched facts. I have helped others sgainst the banks too. I do not charge any fee for this. If you want any help just <PM ME>. I am sure your Mam is watching over you and guiding you. God bless you. AG

phormium

Just a word of caution, we don't know what conversation your mother had with the bank re the life assurance or were you with her at the time and can confirm the reason for cancelling it?. Not all banks assign life policies, the requirement is just that it is in place when the mortgage is taken out. Yes it is usually a condition of the loan that you have one but sometimes people stop paying them for various reasons and realistically the banks find it hard to do anything about it. You need to be sure the bank really did advise her cancel it, as a former mortgage & financial adviser I find it hard to imagine but you never know, there are a lot of inexperienced people in the banks these days so nothing surprises me anymore.

Trish56

Sorry to hear about the untimely death of you Mam at such a young age. As your Mam died intestate (without a will) you will need to take out a Grant of Administration. If the only asset is the house you may be able to do this without hiring a Solicitor.
http://www.courts.ie/Courts.ie/Library3.nsf/PageCurrent/3C4A55EE2355A95C802575AF003E0ED9?opendocument&l=en

You will need to get a current valuation on the property. If you and your brother are the only next of kin then the property minus the o/s mortgage would be divided between you. Once grant of administration is taken out your brother can decide if he wishes to purchase your interest in the property and will need to apply for a mortgage in order to do so.

You should make an appointment with the Bank Manager to discuss the mortgage protection policy and when and why it was cancelled. It was a condition of mortgage approval that a mortgage protection policy be taken out for the mortgage amount over the term and the bank should not have agreed to cancelling same. Perhaps your Mam stopped paying the premium and the Life Company lapsed the policy. One way or another you need to find out what happened.
Did you apply for the Bereavement Grant of €850 towards the funeral costs.