Unpaid mortgage: The case between Maybank and the estate of a deceased woman, Money News

What happens when someone takes out a home loan, dies without a will, and the next of kin of the deceased chooses not to continue paying the mortgage? What will the bank do?

Well, in June 2022, a Singapore case received its judgment after Maybank Singapore sued the estate of the deceased for failing to pay the outstanding sum for the loan of the property.

Prior to her death, the deceased obtained a mortgage from Maybank with her as sole proprietor. She died in January 2020 without a will.

In April 2020 Maybank solicitors received a letter from solicitors acting on behalf of the brother and mother of the deceased advising the bank that the owner had died and to obtain letters of administration for the estate. While the monthly mortgage payments were paid for a few months, they then ceased.

In May 2021, lawyers for Maybank wrote demanding that the estate pay the outstanding monthly installments (totaling $37,057.43) plus interest and legal fees. However, the request was not met.

Then, in November 2021, the attorneys wrote again, demanding the full sum of $454,882.32 owed plus interest and court costs. Again, the request was not met.

Finally, in December 2021, the bank’s lawyers issued a “notice of departure” to the estate. Basically, Maybank would exercise its right to take possession of the property upon the expiry of one month from the date of service of the letter.

A month after the notice, the estate has not turned over the vacant ownership of the property to Maybank.

On March 14, 2022, Maybank launched OS 245 against the estate. OS 245 stands for Originating Summons 245, which is the action of a mortgagee by a bank against the estate of a deceased. This includes the surrender of vacant possession of a mortgaged property and the payment of amounts owed.

Subsequently, Maybank filed Summons No. 1212 of 2022 (“SUM 1212”), under the Rules of Court, for a Public Trustee (PT) to be appointed as the estate’s representative.

The role of the PT, when accepting the appointment, was to accept service of the original subpoena and supporting affidavit (under OS 245) and all subsequent subpoenas. The PT in this case is not related to the deceased or his family.

However, after the first hearing in April 2022, Maybank had yet to receive the PT’s consent to the appointment. At another hearing in May 2022, the PT consented to be named but on the condition that his role be limited to OS 245 or SUM 1212.

In simpler terms, the PT is not responsible for any further legal ramifications (e.g. costs) after the original process.

The judge, however, questioned whether the appointment of the PT was for a limited purpose and whether it would have been more appropriate for someone like the deceased’s mother and/or brother to represent the estate instead.

Maybank said she was unable to appoint another person outside of the PT to represent the estate in the matter. Indeed, no letter of administration for the estate has been extracted and the mother and brother have not given their consent to represent the estate.

In court, Maybank claimed, through its legal representatives, that when a person (in this case, the Public Trustee) is appointed to “represent” the estate, then proceedings are “continued” against that person. .

The court disagreed. He ruled it would be detrimental to the rule “if a plaintiff (Maybank in this case) can simply appoint the PT to accept service of the original process and then pursue an unrepresented estate on an uncontested basis.”

The judge cited examples of previous cases where there must be an effective party representing the estate before any proceedings can be pursued against it. To do this, the representative must first obtain probate or administration of the estate, depending on whether or not a will is made.

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If a will has been made, the executor(s) and/or trustee(s) will apply to the court for a grant of probate (or a grant of letters of administration if not there is not any).

In both cases, they give the liquidator(s) or trustee(s) the legal power to manage and distribute the assets of the deceased.

On the issue that Maybank claimed to have sought and failed to obtain the consent of the mother and/or brother of the deceased to represent the estate beforehand, the judge pointed out that the letters exchanged between the two legal parties did not provide any clear request for consent.

Additionally, the letters appear to indicate that Maybank had not yet determined whether the mother or brother had been granted administration.

In other words, the judge ruled that “a plaintiff has no absolute right to name whom he or she wishes to represent the estate. An applicant must take reasonable steps to identify persons who may appropriately represent the estate and verify whether they consent to the appointment. »

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In summary, the court gives its opinion on the following principles:

  1. The applicant (in this case, Maybank) must first check whether probate or administration has been granted.
  2. If probate or administration has been granted at the time the action is to be brought, the action must be brought directly against the personal representative(s).
  3. If the grant has not been made at the time the action is brought, the action must be brought against the estate. The plaintiff must then, during the validity period, apply to the court for an order appointing a person to represent the estate.
    1. Before making such a request, the applicant should make reasonable efforts to determine an appropriate person to represent the estate, including whether a grant of probate or administration has been granted (through a search of the register of causes), and provide a list of potential beneficiaries, family members or friends.

  4. If permission to probate or administer has been granted after the action has commenced, the personal representative must be named as a party to the proceedings.
  5. If permission for probate or administration has still not been granted after the action has commenced, the plaintiff should seek the appointment of a suitable person to represent the estate in the proceedings. Whatever the applicant’s choice, he must notify the other persons having an interest in the estate (of which he is aware after having made reasonable inquiries) to give them the opportunity to object to the proposed appointment or to decide if they wish to be nominated Instead.

At the end of the ruling, the judge denied Maybank’s request to proceed with OS 245 until the bank takes further steps to appoint a suitable person to represent the estate or request an extension of time to do so. .

Maybank therefore has to bear its own costs for SUM 1212, while the costs for OS 245 are reserved pending the final decision on the case.

The above case is representative of a situation where someone dies without leaving a will, and no one has asked to be granted administration of the estate.

It is therefore incumbent on the bank to find and reasonably appoint someone to represent the estate of the deceased before initiating legal proceedings to recover what is owed to him.

In Singapore, family members are generally not legally liable for debts owed by the deceased. These debts include credit card debt, loans or taxes. There are, however, a few exceptions:

  1. If the family member has a joint account with the deceased, used to service, for example, a personal loan.
  2. The family member co-signed the mortgage with the deceased.

Usually, when someone dies, whether they have written a will, someone will be named “executor” through probate (with written will) or letter of administration (without written will) .

To pay off outstanding debts, the executor will administer the estate and settle those debts by selling investments, withdrawing money left in the deceased’s bank accounts, etc.

Only after settling these debts can the executor then distribute the remaining assets according to the instructions of the deceased’s will. If there is none, then according to the rules of the law on intestacy.

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If, however, the estate is declared insolvent (ie it has more debts than assets), the funeral, testamentary and administrative expenses of the deceased will take priority.

After that, the debt repayment order will follow the Insolvency, Restructuring and Dissolution Act 2018. Beneficiaries of the insolvent estate will not be held responsible for repaying debts (and most likely debts will be written off).

So if you own an estate or real estate and you write a will, while title to the property passes to your named beneficiaries, you can probably rest assured that any unpaid debt for that property will first be administered by an executor.

This means that the burden of the housing loan (if you are a sole proprietor) will not be passed on to your beneficiaries.

It could, however, mean that the executor would have to sell the house in order to fully pay off the outstanding loan (if the deceased is insolvent), even though title to the house is supposed to pass to the beneficiary according to the will. .

This article was first published on 99.co.

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