Receiving an inheritance in Orihuela Costa or Torrevieja is usually a complex process, especially if it includes real estate. The situation becomes even more complicated if the home of the deceased family member has an outstanding mortgage. Many heirs fear losing their own personal assets when accepting a property that carries considerable bank debts.
Fortunately, civil law offers legal mechanisms to protect your personal assets in these situations.
Accepting the inheritance under benefit of inventory
This is the safest legal tool if you suspect that the debts on the property are high. By accepting the inheritance under benefit of inventory, your personal assets remain completely protected and separate. The mortgage and the debts of the deceased will be paid exclusively with the assets of the inheritance itself (such as the sale of the house or the money in their bank accounts).
If any money or property remains after paying the bank, then it will safely pass into your hands.
The extreme alternative: Repudiation of the inheritance
If a financial study shows that the value of the mortgage is much higher than the actual market price of the house, the best option may be to refuse. The repudiation must always be formalized before a notary. By signing the waiver, you cease to be an heir for all legal purposes, so the bank will never be able to claim anything from you.
The crucial role of mortgage life insurance
Before making any decision, it is essential to check whether the deceased had taken out a life insurance policy linked to the mortgage. In many cases, this insurance covers the total outstanding debt with the bank upon death. This allows the heirs to receive the property completely free of charges.
The deadline to manage inheritance taxes is only six months. For this reason, the tax team at Orihuela Solicitors urgently analyzes the status of the property charges to advise you on the safest option.
