INHERITANCE ISSUE - ADVICE NEEDED!!

A friend of mine contacted me recently asking for advice about a Spanish Property where the owner died last year without leaving a will.

The owner took out a mortgage with Barclays Bank Gibraltar for around 650k euros Without any Life Insurance? The House is estimated to be worth around 350/400k. 

The only dependant is the owners 10 year old boy who lives with his mother the owners ex wife. A Trust fund is being set up for the boy in the UK but there is obviously a difficult situation to resolve with this Property and the Gibraltar  Bank. They only recently found the Property and discovered that a Spanish bank account he had is still paying all the Community Fees and other taxes even though they have been informed of his death on a number of occasions!

They will of course need legal advice both in the UK and Spain but my main question relates to what the banks position is regarding the loan on the property and also should they have insisted that the buyer took on Life Insurance?

It looks to me like a "Can of Worms" but it needs sorting out

 what was the decease´s nationality? Did he have other property assets abroad?

 Hi Maria,

The decease's nationality is British. All of his other assets were British too.

 And he has real estate assets in the uk?

Residency?

What equity does the Spanish house have?

 Hi Maria,

The owner was a non resident. There is no equity in the house, in fact it's probably worth 200k less than the mortgage balance?

The main question relates to whether there will still be a liability with the Bank in Gibraltar who failed to insist that the lender took out Life Insurance. The childs estate in the Uk could end up having to fund any mortgage loss after the property is sold?

It is possible in Spain to renouce an inheritance but you would also want to look at the mortgage with the gibraltar bank to make sure they could not claim against the UK estate.

It is not unusual to find mortgages where there is no life assurance.

I would suggest speaking with a Gibraltar based lawyer.

Maria,

I have no direct knowledge about Assetts held in the Uk but I believe there is property included.

Hi Faro,

The Uk Solicitor handling the formation of a Trust Fund for the Child will contact both the Bank in Gibraltar and will need a Spanish lawyer to advise about the legal aspects of dealing with the Spanish owned property.  It is quite a complex situation but a lot depends on the attitude of the bank towards the mortgage debt.

 Dear Mike:

I would suggest the children´s estate to start a dation procedure regarding that property. If they need my help, I would be pleased to assist them with this.

Kind regards,

MAria