Having the possibility of accepting an inheritance not only implies receiving good things: accounts with a lot of money, properties on the beachfront or the family business that works like a Swiss watch, but also the debts of the aforementioned assets. When it comes to real estate, it is common for them to come with a mortgage. Which on numerous occasions results in the heirs deciding to renounce the inheritance.
But don't worry, all is not lost, in this post we are going to explain what you have to do to avoid a loss in case you get a mortgaged house.
Mortgage linked to life insurance
First of all, once you realize that the home you are going to inherit comes with a mortgage, you have to check if the deceased had life insurance. If the answer is affirmative, the insurance company will be responsible for paying the rest of the mortgage, leaving the home free of charges.
Sometimes it can happen that the amount of the life insurance is higher than the remaining mortgage. If this happens to you, the money that is left over will be distributed among the beneficiaries.
In case life insurance has not been taken out, you have the following 3 options available:
1. Accept the inheritance.
2. Reject the inheritance.
3. Accept the inheritance for the benefit of inventory.
Accept the inheritance of a mortgaged home
Article 1003 of the Civil Code says: "By acceptance pure and simple, or without benefit of inventory, the heir will remain responsible for all the charges of the inheritance, not only with its assets, but also with his own."
In case you accept the inheritance in this way, the beneficiary will accept the charges that come with the inherited property. The mortgage will remain in the original conditions, only the name of the owner will have to be changed. This is a procedure that should be free and is carried out with the death certificate and the will.
Inheritances cannot be rejected as long as the person who wrote them is still alive. But once you have passed away, the inheritance can be rejected.
You have to keep in mind that, if you reject the inheritance, you will not only lose the house, but all the assets that were included in the inheritance. Therefore, before making the decision, think it over.
Acceptance for the benefit of inventory of the inheritance of a home with a mortgage
This method of accepting the inheritance is used in the event that the inheritance comes with debts because it is the one that most favors this situation. The Civil Code in its article 1023 establishes that the inventory benefit produces the following effects in favor of the heir:
- The heir is not obliged to pay the debts and other charges of the inheritance until the assets of the same reach.
-He preserves against the inheritance all the rights and actions that he had against the deceased.
- They are not confused for any purpose, to the detriment of the heir, their private assets with those belonging to the inheritance.
With this option, the beneficiary's estate is protected from the debts that the deceased may have, which will be paid with the inheritance funds.
If you are in a situation like this, the ideal is to contact an Inheritance Attorney.