End of mortgage term coincided with death?

End of mortgage term coincided with death?

9:56 AM, 27th January 2023, About A year ago 5

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Hello, Can anyone advise ? 🙏

My Dad was recently in the process of selling 3 flats and the Mortgage Lender was aware this was very imminent and were prepared to wait a SHORT while (weeks) for this to conclude.

The term ended on 10th Jan and two of the three were to be sold close to that date. There’s no money in them but were sold with maybe 10k extra so would cover the mortgages.

As it’s half empty due to vacation for sale, the mortgage was falling into arrears.

HOWEVER, my Dad passed away before any completed.

Due to having to apply for probate now probably these sales will be lost. As they have sent letters saying repossession will occur after the 10th if not repaid I presume they will soon apply?

It would actually be better for us if they took over as it’s a stress to try and RE-SELL and the debt is only increasing meaning they aren’t financially viable.

What on earth do we do?

Tell them the sales are off, here are the keys and that’s the end of that?

It goes down on my father’s credit file and that’s the end?

Or tell them my father passed and they must give us time to re-sell as executors, even if getting in arrears (could take longer than 6 months. Last time it did).

If so, what do we do if they THEN repossess and charged US the council tax/arrears/difference if the flats are UNDERSOLD??

Can they do that? Will the debt follow us or dad?

He doesn’t have much in the way of an estate but can they claim against it even if it sold say in two years time?

I know once they go to receiver they can actually keep them years under poor management and you are liable for council tax, building insurance etc before actually selling.

Do we have to wait two years plus before we can distribute the LITTLE estate there is to SEE if they cleared his debt in the sales?

Does putting the Deceased noticed Article to Creditors in the paper cover Mortgage Debt? (Ie if they don’t contact us for two months?).

What on earth is BEST?

Such a stressful time for us to have to deal with tenants/taking over building insurance & licenses as father’s Direct Debits will be cancelled and we know nothing about this.

One of the current tenants is underpaying rent so not covering the mortgage now it has increased, and being disruptive to buyers.

One Flat is empty and was being purchased by a FTB who will probably lose the rate they had and pull out now and have to wait for probate.

Do we re-rent the empty one to cover the mortgage WHILE this is being repossessed OR sold by us?

We can’t FACE all this really?!

As he’s not got much else, do we NEED to apply for probate and if we don’t then we aren’t the ‘owners’ or are we forced to apply for probate?

Thanks in advance.


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Seething Landlord

12:55 PM, 27th January 2023, About A year ago

You refer to applying for probate but this would only apply if your father left a will, so I think that is the starting point and will determine how the estate is administered, rather than its value.

The situation sounds quite complicated and you probably need to consult a lawyer who can review the whole matter and advise on your rights and responsibilities and how best to handle the various issues, including what you should be saying to the mortgage lenders.

Simon M

12:56 PM, 27th January 2023, About A year ago

Sorry for your loss.

I recently discussed a similar situation with a conveyancer. The seller had died shortly before exchange so no time to arrange probate, although in the example it was the seller's own home, not BTL or flats. His response was that it happens occasionally and lenders had an established process - which depends on the circumstances, such as how close the sales are to completion. His view was that the mortgage lenders acted reasonably and sellers did not lose out significantly. It sounds as if a good conveyancer and reasonable lender should be able to sort it out.

That may be some reassurance. My view would be to speak to your father's conveyancer straight away. If the buyers are keen, I'd want to keep them onside too.

Judith Wordsworth

13:43 PM, 27th January 2023, About A year ago

Sorry for your loss.

As Executor(s) the first port of call would be your conveyancer. They will advise you.

Did your father have life insurance or a life policy tied to the mortgage(s)? If so that should kick in without the need for probate to be obtained and likely pay off any outstanding mortgage(s).

Second port of call, speak to the lenders. It might have been a condition of the mortgage(s) to have a life policy in place. They are usually understanding, often suspending any mortgage monthly repayments which are then cleared from the proceeds of sale.

Personally I wouldn't re-rent on out to pay the mortgage. All you need is an awkward tenant. But if that's what you want to do speak to the Local Authority who might take the property on for a 3 or 5 year term which will certainly give you breathing space. But check on the EPC's, ECIR etc. to see if worth doing.

Freda Blogs

16:10 PM, 27th January 2023, About A year ago

I am sorry to hear of your loss. Unfortunately, upon a death, especially of a close relative, there is a lot of bureaucracy to be dealt with at a time when one is emotionally least equipped to deal with it.

The first thing to establish is whether or not your father left a will, in which case that will have to go through probate, and if he did not, i.e. he died intestate, then the rules of intestacy will apply and you need to apply for Letters of Administration - in that case, unless his wife is still living, the chances are that as his children, you are the beneficiaries, but that does not, at this early stage, make you the 'owners' and have to assume the liabilities, which remain with your father's estate until that is settled and his liabilities discharged. Broadly speaking, Probate and Administration follow much the same path. You do not need a solicitor, but from your questions, and the issues going on with your father's estate at the time of his death, some advice from a qualified probate solicitor would be a good idea, even if you don't want them to deal with the whole estate for you. They can also help with the dreaded form filling required.

My suggestion is that as a first step, you advise the banks, mortgage company/s etc (bereavement section) of your father’s death, and they will ask you for a copy of his death certificate. In my experience, and astonishingly, despite death being a very regular occurrence, many (but not all) financial institutions are appallingly bad in dealing with deaths of customers and some inexperienced staff dish out very poor 'advice'. I suggest you go on each relevant company website initially and see what they say. Obtain several certificated death certificates, as you will need them to send to various organisations.

I understand your concerns, but do not immediately panic as a death effectively 'freezes' a lot of financial activity, and the banks and mortgage company are limited in what they can do. Be aware that they may be unwilling to talk to you without the 'authority' of Probate/ Administration, so you may have to be tenacious, perseverant and accept a lot of frustration.

I suggest you cannot contemplate the current sales (other than try and keep them warm if you wish to) or a re-let at the present time. Just eat the proverbial elephant one bite at a time, as it is all that you can achieve initially.

Good luck.

LordOf TheManor

19:00 PM, 27th January 2023, About A year ago

Sorry to hear of your loss, Darren - and the subsequent situation being what it is.

Freda Blogs has given you really good advice..... I'm adding a bit to it.

If a Last Will & Testament exists, it will name the Executors of the Estate. If that's the case, be in touch with the Executors and ask them if they're happy to act for the Estate. They are not obliged to take up the Executorship, even if they said they would. If they exist and they're happy to act for the Estate, many of your questions will become issues for them, not YOU. You could, of course, work with them to provide the information on where things stand to date etc. If there are Executors and they choose not to act as nominated, they will need to officially renounce their position to the Probate Court so that Letters of Representation can be applied for by you and/or others.

If there is no Will, you and/or any other compatible capable person with an interest in the Estate will need to apply to Probate for Letters of Administration. This is compulsory as your father owned land and property - there is no getting around it, whether the assets are worthless or not. You can't dispose of them without the papers authorising you to act in the sale - or anything else e.g. getting new insurance on the property (at the expense of the Estate) while it awaits whatever the outcome is.

Darren - did your father have an accountant? If your answer is YES - which I hope for your sake it is - please get confirmation of the date that your father's tax affairs were most recently up to date. As we are near tax year end, I'm sure the accountant would recommend bringing your father's tax affairs to a close at date of death. This is to formally establish his tax liabilities (and losses, etc) so that you have the information to include in the application for Probate - relevent whether this is you or an Executor.

You'd come to a standstill in the Probate application without it. Probate will not be granted until all tax liabilities of the deceased are brought up to date. Do you have access to your father's book-keeping, his bank statements, his rent receipts, expenses, etc for the current tax year? Someone has to find and collate that information - the sooner the better - for things to move forward one way or another.

As Freda helpfully pointed out, you need to notify the banks, mortage companies, the Council + any active subscriptions etc of your father's passing. A copy of the Death Certificate should suffice to put things 'on hold' while the administration of Probate in whatever form applied for is awaited.

While putting all outgoing expenses are 'on hold', build a list of contacts + addresses so that you have easy access to notify the same crowd on receipt of Letters of Administration. Most organisations appreciate it takes a certain amount of time and grant 'grace periods' for the known time-lagged processes.

Sort the above as a priority so as not to waste more time further down the track. If you can, keep the buyers sweet and take advice on the tenant situation, too, when you're better informed of the Estate's position.

Chief advice is to prioritise the admin of the Estate first and foremost. Nothing else, whether it's a sale or re-let, can happen without the official transfer of authorisation from your father to yourself (and/or other compatible capable beneficiaries - or professionals if you prefer - but this is only possible when you're in the authorised position to appoint them on behalf of the Estate).

It'll take time to pan out because most of the timescales (the admin ones for sure) are out of your control - hence the chief advice.

With the required admin in place, the rest can be authorised as it goes. If you've managed to keep the sale alive in the process, you'll be in position to sign it off if the sale goes through as intended.

Darren, the whole process is not one that can be rushed. There is no quick fix, so don't let the stress of the current unknowns get to you as that won't help anyone or YOU. It'll be ok in the end - and that's for sure - if not, it's not the end, so keep going!!

Good luck, Darren.


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