Are heirs of an estate responsible for its debts?

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SelinaCooper
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Are heirs of an estate responsible for its debts?

Post by SelinaCooper » 26 Feb 2020 16:57

Hi,

My father passed away in Cyprus some years ago, leaving my mother and 4 adult children. He was domiciled in Cyprus, the rest of us are resident in the UK.

He died suddenly, with his financial affairs in a mess: no will, owing taxes, and with an outstanding mortgage to Alpha Bank on his property. After many years trying to sort out the administration of his estate, we thought the end was in sight. However, Alpha Bank say that they are - finally - prepared to repossess the property, but we will have to pay them the difference between the value of the house and the outstanding debt.

The debt is now huge as the bank have continued to charge interest: the bank refused to freeze the debt, refused to repossess the house and we were advised we couldn't sell the house ourselves until administration of the estate was finalised.

Our understanding is that, in Cyprus, heirs are not liable for the debts of the estate. However our solicitors have told us that Alpha Bank have been successful in just one case against heirs, so whilst it's unlikely it is possible that they may have a case against us.

Does anyone know of Alpha Bank (or others) successfully suing heirs for debts? Alpha Bank are pushing our solicitors for our UK addresses, so I think they intend to come after us. Any advice very welcome!



Pantheman
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Re: Are heirs of an estate responsible for its debts?

Post by Pantheman » 26 Feb 2020 19:54

Sorry to hear about your issues, that bank is a b*gger to deal with and I am very surprised that they can chase a heir for someone else debt.

When your late father took out the mortgage there must have been a guarantor, do you know who that is?? The developer perhaps? He is now responsible for the debt.

Personally I would tell them to get stuffed and let them chase me, with the UK out of the EU, is suspect it will be hard for them to do anything.

Good luck all the same.


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Re: Are heirs of an estate responsible for its debts?

Post by Nigel Howarth » 26 Feb 2020 20:07

Hi Selina

I've never heard of a bank pursuing the heirs of an estate for the deceased's debts!

But as Pan has said the bank's here are b*ggers to deal with.

If your late father bought the property off-plan from a developer, the developer would have acted as his guarantor - and it's the developer the bank should be chasing, not you.

Regards,


Nigel Howarth
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SelinaCooper
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Re: Are heirs of an estate responsible for its debts?

Post by SelinaCooper » 27 Feb 2020 12:46

Thanks both of you for your replies.

Firstly, there was no developer involved. As my dad was in Cyprus for many years, he (to the best of my knowledge) bought his own land and built his own house. As far as I know the mortgage was obtained on the property at a later stage. It was news to us after his death as we assumed the property was owned outright!

I haven't seen the paperwork, but we know that none of us agreed to act as guarantor for the loan. I'm assuming that he couldn't put anyone's name down without their knowledge? We really cannot work out how they hope to pursue us. However, they are pushing for my mother's UK address: she owns a house in her own name in the UK. She's in her 70s and understandably anxious.

We'll continue pushing our Cyprus lawyer for more details, but thanks for confirming what we thought.



SelinaCooper
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Re: Are heirs of an estate responsible for its debts?

Post by SelinaCooper » 27 Feb 2020 12:56

Just re-read Pan's reply: "there must have been a guarantor for the mortgage". Is this a legal requirement in Cyprus?
No one has mentioned this to us, but many people in Cyprus assume that we know the Cypriot system because my dad lived there. I think the close-knit families out there can't quite believe that we had no idea of my dad's finances.



Pantheman
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Re: Are heirs of an estate responsible for its debts?

Post by Pantheman » 27 Feb 2020 14:57

SelinaCooper wrote:
27 Feb 2020 12:56
Just re-read Pan's reply: "there must have been a guarantor for the mortgage". Is this a legal requirement in Cyprus?
No one has mentioned this to us, but many people in Cyprus assume that we know the Cypriot system because my dad lived there. I think the close-knit families out there can't quite believe that we had no idea of my dad's finances.
If he bought from a develop directly and with no title deeds then yes the developer would have stood as guarantor.

If he bought with a title deed in place then he may not have a guarantor.

How did your dad buy this place?? If off plan directly with no deeds, then tell the bank to go whistle. How can you be held responsible for someone else's actions that you may not have greed with at the time?? I am thinking it is just scare tactics by the bank.

My kids don't know about my finances so why should you know about yours??


For all your property needs, we offer Trust, Integrity, Honesty.
FSB Properties Ltd
Registered and Licensed Real Estate Company Co. Reg. No. 795, Lic. No. 250/E
Member of ETEK Registration No. A201999
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SelinaCooper
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Re: Are heirs of an estate responsible for its debts?

Post by SelinaCooper » 27 Feb 2020 17:59

My dad lived in Cyprus for many years, so he bought the land and then built the house over a long period. I don't think he borrowed to do this, and no developer was involved as he oversaw the build. Sometime after the house was finished he then took out a loan/mortgage secured on the house, which the rest of the family weren't aware of until after his death.

I'd be surprised if a guarantor were needed to take out the loan, as at the time he had enough income to repay it, but I didn't know if it was legally necessary for all mortgages in Cyprus.

I appreciate your input: although our situation is unusual, we've run into all the usual issues of Alpha Bank being impossible to deal with, not knowing if Cypriot law firm are actually working in our interests, assuming Cypriot law is like English law and then finding out it differs.

We're waiting on (another) email from our lawyers...



Nigel Howarth
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Re: Are heirs of an estate responsible for its debts?

Post by Nigel Howarth » 27 Feb 2020 18:35

If your dad paid for the land and the house without needing a mortgage, then I assume he borrowed the money for something else and used the property (house & land) as collateral.

If this was the case, it's possible (but unlikely) that the bank would have loaned him the money without a guarantor. And if he'd used a family member to act as guarantor, the family member must have agreed to the arrangement.

Perhaps if you could PM me with the name of the law firm you are using, I could let you know if I've received any complaints about them. (Presumably your dad appointed this firm as the administrators of his estate?).

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
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