What happens if your mortgage guarantor dies?

What is a guarantor in a will

The first thing to keep in mind is that inheritance is a right, not an obligation. Therefore, one option available to the heirs is to reject the inheritance. In this way, the debt contracted with the bank is also rejected and they do not have to take over the mortgage. However, this alternative implies that the heirs also lose the house.

Another option worth mentioning is that of accepting the inheritance as beneficiary of inventory. In this case, the inheritance is accepted, including the debt corresponding to the mortgage. However, a separation is made between the inherited assets and the heirs’ own assets, which allows that, in case of non-payment, the heirs do not have to respond with their own assets, but only with the assets corresponding to the inheritance.

The situation is different if the mortgage has more than one holder. The first thing to keep in mind is that mortgages with several holders are joint and several. That is to say, all the holders must respond for the totality of the debt, not only for the part corresponding to each one of them. Thus, in the event of the death of a mortgage holder, the other holder must ensure that the mortgage payments continue to be paid in full if he/she does not want the bank to be able to initiate a seizure of the property.

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If the guarantor dies the guarantee is terminated or whoever responds or assumes payment of the obligation

The guarantor responds by law with all his assets, both present and future. In addition, in these loans, in many cases without really being aware of it, the guarantor waived the benefits that the Law grants him, which in practice means that if the person he guaranteed defaults, the creditor can claim directly from the guarantor the totality of the debt.

The consequence for the heirs is that if they accept the inheritance, the guarantor will automatically extend to them. That is to say, the heirs will occupy the position of the deceased guarantor and will therefore be able to respond with their assets for the debt.

What happens to the guarantor when the guarantor dies?

If your father had the bad idea of granting a guarantor to facilitate the purchase of a house to your brother or whoever, there is something that the father should know, but also all his future heirs: that guarantor does NOT extinguish with the death of the father.

Usually, when one grants a guarantee, what one does is to sign a document cooked up by the bank, which articulates it as (i) joint and several and which (ii) includes the waiver of the benefits of excusion, order and division. This substantially means that the beneficiary bank of the guarantor, if it executes the guarantee, may proceed directly against the assets of the guarantor, without the need to previously (i) execute assets of the guarantor, nor (ii) exhaust its assets.

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Once the inheritance of the guarantor’s father is open, a simple search in the land registry by the heirs may reveal real charges such as mortgages. But the guarantors must be sought and found, if the decedent did not openly communicate that he lent them. And some things are not openly proclaimed.

Endorsements are inherited

Everyone looks forward to owning their own home. Very few people pay the cost of the home all at once, in cash, while most people resort to mortgages. When the mortgage loan is signed, few people think about possible related problems. Who pays the mortgage in case of death? In this post, we answer the steps to take and the details you should know.

When the holder dies, first of all, it must be taken into account that some steps have to be taken. If the person who dies had it contracted with an entity, it is necessary to know what happens with this debt associated with the purchase of a house.

The first thing to do is to inform the entity of the situation. This is vital, since the loan installments will continue to be charged to the account associated with the deceased and nothing can be changed until there is a change of name.

It is necessary to clarify whether the heir must take over the loan installments or not, since inheritance is not mandatory, but a right.  In this case, the heirs can accept the inheritance and assume any kind of debt or, on the contrary, reject the inheritance completely.

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What happens if your mortgage guarantor dies?
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