What happens to a mortgage in the event of death?

What happens to a mortgage in the event of death? What applies to further debts of the deceased person?

A mortgage is a limited right in property that is encumbered on a property and serves to secure a monetary claim. If the debt secured by a lien is not paid in accordance with the contract, the creditor (usually a bank) has the right to demand the property’s realization. The sale’s proceeds are used to repay the claim or to satisfy the pledge creditor. The mortgage must be recorded in the real estate register in order to be valid. But the debtor and property owner do not necessarily have to be the same person.

Because the mortgage is closely linked to the property, this also affects the inheritance: When a property owner dies, the property is inventoried as part of their estate on the assets side. The mortgage is then on the liabilities side. Until the estate is divided, all heirs have joint ownership of the entire estate, including the property and the mortgage. They are jointly and severally liable for the debts of the deceased and, together with the property, for the secured claim.

The mortgage remains tied to the property, even after the division of the estate. This means that it accrues to the heirs who receive the property. Under certain circumstances, the cancellation of the land register entry on the mortgage bond can be requested – namely if the secured claim has been extinguished. The property is then released from the mortgage.

More about the Subject:
Inheriting real estate – What testators should regulate
What does a notary do?
In case of debt: Turn down or accept an inheritance?

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