What can you do if you inherit a property with debts?

When you are told that you are going to receive an inheritance, people tend to focus on the assets and advantages that this entails, but it is not very common to consider the financial responsibilities that this process may entail. Inheriting a property with debt (whether a mortgage or other type) is the most common scenario, which generates considerable uncertainty for the heir as to how to proceed.

What options do you have if you inherit a property with debts?

All debts affecting a property are also inherited. If you are the heir, you must continue to pay the mortgage instalments or settle any outstanding property tax, homeowners' association fees or utility bills.

Before deciding whether to accept or renounce the inheritance of which you are the beneficiary, you need to know the deceased person's assets and whether the estate is affected by any debts. You can check this at the Land Registry, as the information is public.

The three options available to you when faced with an inheritance with debts are: to accept it, to renounce it or to accept it with the benefit of inventory. But what does each of these three options entail?

What does renouncing the inheritance of a property entail?

If you are going to inherit from a deceased person and you know that there are debts within the estate, you can renounce the inheritance in its entirety. This way, you will not have to pay the amounts that could theoretically be claimed from you. You should also bear in mind that if there are other assets within the inheritance, you would also be renouncing them.

What does accepting the inheritance of a property involve?

If you decide to accept the inheritance, you should bear in mind that you would be accepting the entire inheritance, including any debts. Furthermore, if you accept an inheritance, it is understood that you accept all the assets, even those you are unaware of. The same applies to debts.

For example: I accept an inheritance thinking that there is only a house and money in the bank, but after a few months I receive demands for the payment of debts, which I will have to assume, even though I was unaware of their existence at the time of accepting the inheritance.

There is also the possibility that, once you have received the claim, you can prove that the debt is time-barred or even that the deceased already paid it at the time.

What does it mean to accept the inheritance of a property with the benefit of inventory?

This is your last option and consists of accepting the inheritance, but with the heir's personal assets protected. In other words, you accept any debts that may exist, but these can only be paid with the assets of the inheritance. If the debts exceed the assets, they will never go after your personal assets.

There are also other documents to be assessed, such as the deceased person's will, if one exists before inheritance. Therefore, if you need help with managing an inheritance, please consult us.