Guarantor on loan has passed away

duffysfarm

I will be seeking legal advice in due course on this subject but i was just wondering if some one can shed some light on this.
I am an executor on an estate and in my case a Mother went guarantor on land that her son was buying. Mother passed away and loan has been sold by various banks a number of times. current bank is not aware of any guarantee and they are not looking to call in the debt or anything. Nobody can find the letter of guarantee either. The loan is with a vulture fund and they have offered the son 10% of the loan value if he can refinance elsewhere within 12 months. For the record the loan is worth 30% of the estate.
Solicitor is making a big deal of the letter of guarantee and will not distribute assets until bank waives it but they dont even know it exists as they werent the original bank. To be honest as i type this i dont know what i am looking for here but the solicitor never seems sure of anything and very hard to get an answer from her. As i said i will probably have to get legal advice on the matter but to me it seems that this is the first time that the solicitor has dealt with a case like this given her dealings with us so far and i would have thought it would not be unusual for some one to have passed away who was a guarantor for something.

Bigus

I would consider the guarantee dies with the deceased, it’s not a debt . Mr google might help.

duffysfarm

Thanks for the reply. I have googled it but seem to be getting Australian and uk results more than anything.

Bigus wrote: »

I would consider the guarantee dies with the deceased, it’s not a debt . Mr google might help.

Stanford

Is there a balance outstanding on the loan, the guarantee should have applied to her estate on her passing, were the bank involved made aware of her passing?

duffysfarm

One bank was at the beginning but the loan has been sold a couple of times now, i dont think the current bank are aware of it.

Stanford wrote: »

Is there a balance outstanding on the loan, the guarantee should have applied to her estate on her passing, were the bank involved made aware of her passing?

duffysfarm

Are there different types of guarantees? Could there be a chance that the letter of guarantee would state what would happen in the case of death of guarantor?

Stanford

Who administered your late mother's estate and were they aware of the loan?

Stanford

duffysfarm wrote: »

Are there different types of guarantees? Could there be a chance that the letter of guarantee would state what would happen in the case of death of guarantor?

The liabiilty would normally pass to be discharged from her Estate

Stanford

Bigus wrote: »

I would consider the guarantee dies with the deceased, it’s not a debt . Mr google might help.

Once the guarantor dies the bank loses a degree of security for the loan and is entitled to call him in from the son if so desired

duffysfarm

I am not the son but executor
When you say administered i presume you mean was there a solicitor and yes there is and they are aware of the loan. When we completed for for probate they werent sure if it was a liability or not of the estate and it had only become an issue now when it comes to distribution assets

Stanford wrote: »

Who administered your late mother's estate and were they aware of the loan?

duffysfarm

When you say discharged do you mean the estate should pay it?
Thsnks for all your replies so far. They are really helpful

quote="Stanford;113643305"]The liabiilty would normally pass to be discharged from her Estate[/quote]

Stanford

Yes I mean was there an Executor who administered the estate, the guarantee should have been realised as a potential charge over her estate and provided for accordingly, the Bank can now technically sue the Executor and/or the solicitor involved as they were both aware of the loan, if your mothers estate is only now being distributed then the Bank will either have to rely on the son as sole guarantor or lodge a claim to your mother's estate.

Is the son currently servicing the loan?

Stanford

duffysfarm wrote: »

When you say discharged do you mean the estate should pay it?
Thsnks for all your replies so far. They are really helpful

quote="Stanford;113643305"]The liabiilty would normally pass to be discharged from her Estate

[/QUOTE]

If the current Bank decides to call in the loan and the son can't pay then it becomes a liability of your mother's estate and should be provided for in any distribution of her assets

Bigus

Could the benefactors, indemnify the executors and solicitor ?

duffysfarm

Yes. They have given him a wriiten offer that if he moves bank within 12 months they will give him 10% off the loan. He has orher assets from the estate that will be used to reduce the loan balance and then he will be refinancing. I dont see why the solicitor wont distribute assets and let him do this

Stanford wrote: »

Yes I mean was there an Executor who administered the estate, the guarantee should have been realised as a potential charge over her estate and provided for accordingly, the Bank can now technically sue the Executor and/or the solicitor involved as they were both aware of the loan, if your mothers estate is only now being distributed then the Bank will either have to rely on the son as sole guarantor or lodge a claim to your mother's estate.

Is the son currently servicing the loan?

duffysfarm

Thanks everyone for your input so far. I have learned more here than from dealing with the solicitor over the last 2.5 years!

Stanford

The Solicitor is acting prudently.

When the mother died both the executor and solicitor should have made provision for the potential liability of the bank when taking out probate, if they did not do this then they are exposed to the bank. Why on Earth should the beneficieries guarantee the loan which is now to be dealt with by the son and the bank.

Get good legal advice from a solicitor skilled in probate matters and do not distribute any assets until you have established the legal position

Stanford

Your Solicitor should also write to the Bank and ask them what security they hold in respect of the loan, it is for them to produce it, not you

Stanford

I meant the son's solicitor, the bank won't tell you anything because of GDPR.

He is the borrower so he must have a Loan Agreement which would outline the security required.

duffysfarm

That seems like a very sensible suggestion. Will get solicitor to do that as soon as possible. Thanks

Stanford wrote: »

I meant the son's solicitor, the bank won't tell you anything because of GDPR.

He is the borrower so he must have a Loan Agreement which would outline the security required.

duffysfarm

That seems like a very sensible suggestion. Will get solicitor to do that as soon as possible. Thanks

Stanford wrote: »

I meant the son's solicitor, the bank won't tell you anything because of GDPR.

He is the borrower so he must have a Loan Agreement which would outline the security required.