Inheriting a mortgaged apartment: accept or refuse?

Is it possible to inherit a mortgage - yes. Is the “game” worth the candle? The issue is controversial and depends on a number of factors: whether the main borrower has co-borrowers or guarantors, what are the circumstances of the death of the testator. Even the presence and type of insurance that was used when issuing the loan plays a role.

Inheritance of a mortgaged apartment is carried out in the manner prescribed by law. And the presence of an encumbrance, which is always used in mortgage lending, does not mean that the heirs will not be able to receive the housing.

This leads to some peculiarities in terms of the subsequent re-registration of rights to real estate and the distribution of rights and obligations of the parties to the relationship.

Inheritance lottery – housing as a gift or unaffordable credit debts?

The rules of inheritance law establish a rule according to which the inheritance mass, that is, the entire complex of rights and obligations that are subject to transfer to the heirs, is transferred to them in its entirety. Claimants to property cannot choose to inherit one part by refusing another. They either take their share or abandon it completely (Article 1110 of the Civil Code of the Russian Federation).

This rule is called universal succession. This means that all existing rights and obligations of the deceased, which by law can be transferred to the heirs, are considered as a single complex. This means that mortgaged housing, if any, is an inseparable part of the entire inheritance.

The bottom line is that housing purchased with the help of credit funds is under encumbrance. The deceased was entitled to it, but also bore the burden of repaying the loan. That is, he owed the bank a certain amount of money. Accordingly, the transfer of rights to such an object is possible only with the simultaneous transfer of responsibilities. And if the heir accepts the inheritance, then he also accepts the obligations of the deceased under such an agreement. But there are also some nuances.

Payment of mortgage debt by an insurance company

If the death of the borrower is recognized as an insured event, payment of the remaining portion of the loan falls on the shoulders of the insurers. She pays the bank an amount equal to the loan debt, plus 10% compensation. If the insured amount exceeds the debt, the heir receives the difference.

However, the insurance contract provides for an impressive list of causes of death for which the event causing death is considered non-insurable. In addition to military actions and radiation contamination, these include the death of the borrower, provoked by his actions. Basically, an insured event is the death of the insured as a result of illness or accident.

Often, insurers try to prove that the cause of the borrower’s death was a chronic disease, which he concealed at the time of concluding the contract, and refuse to pay insurance. In any case, the document must be carefully studied, and it is best to seek advice from a lawyer. If the insurance company refuses its obligations, it can be forced to pay the debt by a court decision.

How is mortgage housing inherited?

The legislator does not limit the possibility of inheriting housing, even if it is mortgaged (under encumbrance). In this case, the transfer of property is carried out simultaneously with the transfer of the obligation to repay the existing debt, as well as with the re-registration of the encumbrance.

When inheriting a mortgaged apartment, it is worth considering a number of rules:

• Along with the right to an apartment, the heir also receives responsibilities related to the repayment of the loan agreement (interest, late fees, additional fees, among others);
• Interest is accrued until the inheritance is accepted (six-month period). If the interest is not repaid during this period, the loan debt that will fall on the shoulders of the heir may grow enormously;
• the encumbrance will not be lifted until the debt is repaid;
• the bank has the right to renew the contract with the heir on new terms, but is not obliged to do so;
• the parties can agree to sell the property and pay off the debt to the bank, while the remaining funds will be received by the heir;
• if there are several heirs, then they receive the rights to the apartment, as well as credit obligations, jointly and severally.

Inheriting an apartment with a mortgage requires the heirs to take certain actions, which will depend on the circumstances.

How to implement inheritance:

1. After the death of a co-borrower

The loan apartment may not belong to the testator individually, but jointly with other creditors (spouses, children, business partners, etc.). This means that they acquired it jointly, as co-borrowers, and have rights and obligations within the limits of their shares.

After the death of a co-borrower, when inheriting property, the heir receives rights and obligations in accordance with his share. Otherwise, there is no difference with inheriting an entire object.

1. Several heirs

If there are several heirs, then the following points must be taken into account when registering:

• everyone has the right to renounce their share in favor of another heir or without specifying a specific person (then the share will be distributed among those remaining);
• if there is no will, then the heirs of the same line receive an equal share of the property (and therefore the mortgage loan obligations);
• if there is a will, the shares can be distributed in accordance with the will of the testator, but everyone receives obligations under the loan agreement in accordance with their share in the right to the apartment.

The sale of an apartment by several heirs can be carried out with the consent of all. Controversial issues are resolved in court at the request of one of the interested parties.

1. Minors

If the heir does not reach the age of majority, the bank does not have the right to collect penalties and additional commissions from him. The Bank will maintain a dialogue with the legal representatives of such person, for example, with his parents or guardians.

The sale of an apartment to minors through their representatives will be possible only with the consent of the guardianship authority, which it will give only if the sale is more beneficial to the minor than preserving the object. Any controversial issue will also be resolved only through the court.

Refusal of a will

With the acceptance of a credit apartment as an inheritance, not everything is so simple. On the one hand, the property may turn out to be valuable and in demand by the heir, on the other hand, the amount of debt together with interest, in the context of declining market prices for real estate, may turn out to be higher than the value of the accepted inheritance. Financial reasons may lead to refusal to accept an inheritance.

The beneficiary has the right to refuse to accept the bequeathed property if the total outstanding financial obligations exceed the price of the property received.

Causes of concern may be:

• Recent registration of a mortgage, when the total debt may be greater than the price of living space that the market is willing to pay for it.
• The presence of delays in several payments and the formation of fines and penalties.
• There are no funds to pay fees when inheriting by non-relatives.
• There are too many applicants for 1 property, large associated costs associated with accepting the inherited property.

To refuse to participate in the distribution of the inheritance, it is enough not to contact a notary during the first six months after opening the inheritance case. Heirs who decide to participate in accepting the property of the deceased may invite the refused persons to visit a notary to record the notarial refusal.

In the process of re-registration of an inherited apartment, the bank has no right to interfere with the procedure; no separate approval is required from the credit institution, however, after accepting the property, the issue of liquidating the loan will have to be resolved - by selling the home, transferring payments to a new borrower, or paying out insurance if the borrower had insurance during his lifetime myself.

Since the fact of drawing up a will is not a registration action, the bank does not have the right to limit the borrower’s desire to prepare a will; however, subsequently, if he intends to re-register the deceased’s home, the heir will have to coordinate changes to Rosreestr with the bank as the mortgagee.

Legal assistance

Many people try to reduce the time and costs of drawing up a will, but later this approach to registration can play a decisive role when the applicants indicated in the document try to re-register the mortgaged apartment. Most issues are resolved if experienced lawyers get involved in the case.

Competent legal support will eliminate difficulties in drawing up the document and further on the part of applicants for inheritance, who will be faced with the need to agree with the bank on debt repayment and re-registration of rights to the collateral object.

Pros of accepting a mortgage as an inheritance

Accepting a mortgaged apartment as an inheritance has its advantages:

• most often, the testator has already paid off some part of the mortgage, so the new owner can get the apartment for practically pennies;
• the liability of the new owner is strictly limited to the size of the inheritance, that is, the bank cannot collect debt from property that belonged to the heir before accepting the inheritance. In any case, the heir does not lose anything and will not be “in the red” in any way;
• often banks accommodate the new owner halfway and slightly reduce the amount of penalties.

In extreme cases, by agreement with the bank, the apartment can be sold. Difficulties arise only when there are several heirs and they cannot agree among themselves on the fate of the object. In this case, the issue is resolved in court.

Using insurance

The first and most optimal opportunity to resolve the issue of the loan balance is the availability of life insurance for the testator.
Quite often, the life of the testator is insured. In this case, the heirs will be able to repay the debt to the bank at the expense of the insurance payment, in whole or in part. To receive this payment, the heirs must contact the company with an application and documents specified in the text of the insurance contract. If the company refuses to pay the insurance compensation, the heirs may go to court. It will be necessary to prove that there is an insured event, so payment must be made. Sometimes insurance can cover all possible expenses for paying off the testator’s credit debts and all that remains is to re-register the apartment and remove the encumbrance from the property.

But most often, the heirs do not know whether an insurance contract was concluded at all. In such situations, it is recommended to do the following:

1. check the documents of the deceased. The insurance contract will most likely be kept together with the loan agreement;
2. contact the bank and clarify the information;
3. contact your intended insurance company.

In some cases, the bank independently turns to the heir, since he is the beneficiary of the agreement. Therefore, for example, after the death of her husband, the wife who inherits the apartment must only perform actions to accept the inheritance, but it is still better to check the information with the creditor.

The process of inheriting real estate purchased before marriage

If during his lifetime the owner of the property did not have time to determine the circle of persons who will receive the square meters, then the receipt of the inheritance is formalized by law.

The legislation regulates the norms for designating jointly acquired property by a married couple. In particular in Art. 36 of the RF IC it is established that:

• property acquired before marriage is the personal property of the spouse;
• real estate and other things given to a spouse during marriage are not joint property;
• property assets received as an inheritance at the time of marriage are not jointly acquired.

Therefore, after the death of her husband, a woman cannot become the sole owner of the abandoned living space. The object will be divided in equal shares among all heirs of one queue. For example, not only the children of a deceased citizen, but also his elderly parents can claim a house.

If the property was purchased during a registered marriage, then half of the apartment will belong to the spouse, and the second part is subject to division between all existing heirs.

Attention! Children born from a previous marriage, as well as those born out of wedlock, can claim the inheritance. In all cases, it is necessary to have documentary evidence of family ties.

Changes to the terms of the loan agreement

As a general rule, the heir receives the apartment under the same conditions that were offered to the testator.
He will have to return exactly the same amount of money as the testator would have returned if he were alive. However, in practice the situation may differ. Negotiations with a creditor are common. The heir can contact the bank branch and offer to conclude a deal on new terms. Most often, the parties agree to cancel or reduce the accrued penalties. There are frequent cases of interest rate reductions.

Termination of a mortgage: practical situations

Other options for resolving this situation are also possible:

• The apartment can be sold. The heir can independently find a buyer, or he can offer the bank to sell the property at auction. The bank, in this situation, must give its consent to the transaction.
• The remaining debt can be repaid in a one-time payment. The bank will have to recalculate the accrued interest.
• The property can be used differently, for example, rented out. This will require the bank's consent.

To carry out any actions requiring state registration, the bank’s consent is mandatory, since otherwise the previously imposed encumbrance will not allow the Rosreestr employee to carry out a new transaction.

Practical risks face to face

Accepting a mortgage for an apartment is a risky procedure. The heir should pay attention to the following points:

1. By accepting the apartment, the heir also accepts a loan obligation to the bank;
2. the heir will have to pay interest not only from the moment of inheritance, but also for the entire period of validity of the agreement;
3. the bank is not obliged to agree to change the terms of the transaction, but in practice it often accommodates the new owner;
4. it will not be possible to sell the apartment, even to pay off the debt to the bank, until the creditor gives his direct consent;

The amount of debt will directly depend on how much of the loan the testator paid at the time of death. If he has a debt, the heir will also receive an obligation to pay penalties. In practice, banks often accommodate new debtors and reduce the amount of debt, but they are not obliged to take such actions, but only have the right to do so.

It is possible to inherit an apartment purchased by the testator with a mortgage. At the same time, the heir must understand that sometimes he gets a “pig in a poke.” After all, not only the right to a property is inherited, but also a monetary obligation to the bank. The property will be under encumbrance until all debts of the testator are fully repaid, and until then, any transactions will be possible only with the direct, written consent of the bank.

Read: Lifelong maintenance agreement with the right of inheritance of housing in Russia