Father passed away and left mortgage on family home, who pays?

parcark7

Hi,

I'll try keep this short and give as much info as possible.

My dad passed away recently and had no life insurance. He was in financial trouble and was having trouble paying his mortgage. My eldest brother was also living there with his wife and kid. My dad was paying interest only to the banks. There are 4 of us in the family. My dad had been trying to negotiate with the banks for a deal on the mortgage and he had mortgages on other properties too.

The brother still living there now wants to buy the home with the hope of negotiating a deal with the banks at some stage. I too want to buy the house as I have a wife and kid on the way and would not be able to afford a house like it. There was a will and it stated the estate was to be split equally. My eldest brother is the executor.

My questions are:

Who owns the mortgage after my dad passed away?

Can I still opt to buy the house even if my brother lived there?

How do the banks decide who gets the house?

Any info appreciated.

Thanks,

Mark

oakshade

I'm very sorry for your loss.

Your brother as executor should approach the bank. You said your father didn't have life insurance but he should have had some form of mortgage protection which pays the mortgage upon his passing.

Lockedout2

Condolences on your loss.

It's the job for the executor to establish the assets and liabilities of the deceased.

If there are outstanding loans they may need to dispose of property to satisfy the loans.

The question then arises if after selling the investments if there is funds to discharge the loan on the family home.

Depending on how much money if left in the estate will dictate what happens.

At some point the family will have to agree on who will get the house and that may come down to who can come up with the funds and if not it may have to be sold and the proceeds divided between the beneficiaries.

Nekarsulm

"There was a will and it stated the estate was to be split equally"

This is one for a Solicitor.

If your dad only owned his dwelling house, then it would be straight forward, sell the house and divide money between all the children. Thats if there is any money left after the banks and revenue are paid.
But you mention that he has other properties, also mortgaged.
These will also have to be split between the children.

harr

Get a solicitor to clear it up...I would imagine the best scenario would be to sell houses, Banks will take what is owed to them and rest would be divided up according to the will.
Or if you want house then pay off what’s left on current mortgage and pay your brother what he is owed ..,definitely have a look into mortgage protection policies it would have been hard for your dad to get a loan without have a policy in place...

Bigus

Sorry to hear about your dad,

The house ownership of the house and mortgage are 2 separate issues.
The bank don't own the house .

The bank lent money to your dad, the house was security comfort to the bank to ensure they get paid back.
the bank have preference over other interested parties to get their money back and could force a sale by putting in a receiver who will sell the house and pay back the bank plus all costs and give any surplus back to your dads estate .

However , a house with a sitting tenant and a deceased mortgagee , is a nightmare for the bank and a legal minefield , this is why they insist on mortgage protection. To make life simpler for them under normal circumstances .
You need to get good legal advise from a solicitor that's independent of your uncle .

However there is a potential upside for you to gain from the banks now messy situation , by perhaps getting the house cheaper or a portion of the loan written down . Your goin to need to be firm and proactive , and organise your finances in the meantime .

Drumpot

My condolences OP, My dad died 18 months ago with a Similar situation so I know how stressful this can be.

We employed Michael Dowling (PIP) to engage with the banks on behalf of the estate and we have been very happy with his work.

Not to go off on a rant but the entire system is rigged in favour of the banks and this includes knowing your rights and how flexible a bank might be. Its stressful enough losing a parent but having to negotiate something as major as a mortgagee on a family home is very personal and emotional experience.

I recommend you get the professional support to help you get the best deal possible not the best deal you think you can get.

dixiefly

oakshade wrote: »

I'm very sorry for your loss.

Your brother as executor should approach the bank. You said your father didn't have life insurance but he should have had some form of mortgage protection which pays the mortgage upon his passing.

This.

As stated check out the mortgage protection - the bank will have details.

And also, commiserations with your loss.

parcark7

Thanks for all the replies. Really appreciate it. Yeah it's a very tough time and complex estate which makes things worse. All the properties had mortgages owed on them, alot are in negative equity including the family home so it can't really be sold and split 5 ways cause there would be no profit on it.

If the banks are willing to negotiate a deal with my brother then will he have to compensate the rest of the beneficiaries? Or will it come down to an agreement within the family that he's allowed to buy the home at that price?

Would you advise I get my own legal advice to know where I stand with all this and what best way to go forward. I have a good relationship with my brother so am worried it will cause trouble.

I'm not sure he had mortgage protection. Is that not for when you lose your job?

Thanks,

Mark

parcark7

Thanks for the reply dumpot. Did your dad have other properties with outstanding mortgages?

Also, regarding the family home, was there more than one person who wanted it? Was this guy able to negotiate good deals with the banks?

Drumpot wrote: »

My condolences OP, My dad died 18 months ago with a Similar situation so I know how stressful this can be.

We employed Michael Dowling (PIP) to engage with the banks on behalf of the estate and we have been very happy with his work.

Not to go off on a rant but the entire system is rigged in favour of the banks and this includes knowing your rights and how flexible a bank might be. Its stressful enough losing a parent but having to negotiate something as major as a mortgagee on a family home is very personal and emotional experience.

I recommend you get the professional support to help you get the best deal possible not the best deal you think you can get.

elperello

parcark7 wrote: »

Thanks for all the replies. Really appreciate it. Yeah it's a very tough time and complex estate which makes things worse. All the properties had mortgages owed on them, alot are in negative equity including the family home so it can't really be sold and split 5 ways cause there would be no profit on it.

If the banks are willing to negotiate a deal with my brother then will he have to compensate the rest of the beneficiaries? Or will it come down to an agreement within the family that he's allowed to buy the home at that price?

Would you advise I get my own legal advice to know where I stand with all this and what best way to go forward. I have a good relationship with my brother so am worried it will cause trouble.

I'm not sure he had mortgage protection. Is that not for when you lose your job?

Thanks,

Mark

Sorry for your trouble.
Yes get professional advice.
Get any relevant documents together and make copies to bring to the consultation.

Sometimes self employed may not have mortgage protection policies.

seamus

parcark7 wrote: »

If the banks are willing to negotiate a deal with my brother then will he have to compensate the rest of the beneficiaries? Or will it come down to an agreement within the family that he's allowed to buy the home at that price?

Think about it more in terms of the "estate" rather than the beneficiaries. The beneficiaries get what's left after the estate has repaid it's debts.

In order to clear down debts, the executor can sell assets, and has the authority to do so without the approval of any beneficiaries. But he has an obligation to ensure that the estate is paid a fair value for what is sold.

So the executor can sell the house to your brother. The mortgage is then cleared and whatever is left in the sale goes back into the estate and is divided amongst the beneficiaries.

I have a good relationship with my brother so am worried it will cause trouble.

It's a valid concern and a good reason to tread carefully. By all means seek independent legal advice, but be careful about having that solicitor send letters. If it looks like you've gone running to your own solicitor, that's a really fast way to turn people against you.

Realistically the best thing to do here is sit down with your brother and agree between the two of you, what it is that you want to happen. It sounds like someone is going to have to give up on the idea of owning the house.
Once you've agreed who gets the house, then get the estate's solicitor to help make that happen.

I'm not sure he had mortgage protection. Is that not for when you lose your job?

That's income protection. Mortgage protection is a form of life assurance that pays off the mortgage if you die before the term is up. It's a statutory requirement in order to take out a mortgage. However for older people it's very expensive, thousands of euro a year.
So a common workaround is to take out the protection, pay it for a couple of months and then stop.
In theory, the insurance company notifies the bank who should immediately try to force the sale of the property if the borrower doesn't reinstate the insurance.
In practice banks turn a blind eye to it. Too much hassle.

Fred Swanson

This post has been deleted.

wordofwarning

OP if you are heavily in negative equity. You may be better off letting the banks take the property, letting them be burnt with the negative equity and attempting to repurchase the properties when they are on the open market again. I honestly can't see a bank being willing to cut a deal with someone who they didn't have a relationship with.

You need a skilled negotiator to deal with the banks. It is a nice thing to keep your family home, but that does not have mean it makes financial sense and you will make the right decision ie buying this house based on emotions rather than financial sense

You really need your solictor to answer these questions

source

wordofwarning wrote: »

OP if you are heavily in negative equity. You may be better off letting the banks take the property, letting them be burnt with the negative equity and attempting to repurchase the properties when they are on the open market again. I honestly can't see a bank being willing to cut a deal with someone who they didn't have a relationship with.

You need a skilled negotiator to deal with the banks. It is a nice thing to keep your family home, but that does not have mean it makes financial sense and you will make the right decision ie buying this house based on emotions rather than financial sense

You really need your solictor to answer these questions

The bank will deal with whoever the authorised person is on the account. The bank doesn't care about the relationship the person dealing with them has with the bank. Indeed the bank employee dealing with the account may never have had contact with the ops father. Their sole objective is retrieving as much of their money as possible.

Op getting a third party involved is a very good idea, a good financial advisor may be able to negotiate a write off based on the current market value of the properties ... depending on the financial institution involved and the level of debt. Though it may be a condition that any sale is conducted on an arms length basis.

If the estate is in as much negative equity as you think, there may not be anything left to split amongst the beneficiaries of the will following the disposal of the assets and payment to the financial institutions.