You are liable in to the extent of your inheritance of property from your mother
2) your father as guarantor is responsible for repayment of loan
3) your other personal properties would not be sold to recover loan money
Liability of legal heirs on secured loan
Dear Community Members, We currently have a mortgage loan with Canara Bank in West Bengal, amounting to 15 lakhs against a business mortgage. The loan was originally taken out in my mother's name, with my father acting as the guarantor. Due to circumstances, my mother became unable to meet the EMI payments since 2013. Consequently, legal proceedings were initiated, culminating in a court-ordered auction of our property under the Sarfaesi Act. However, my mother contested the matter in the district court, which remained unresolved until her passing in 2018. With my mother's demise, the responsibility for repaying the loan has shifted to my father and me, as legal heirs. My concern now lies in the eventuality that my father, who is currently ill, may not be able to settle the outstanding amount. The loan, which has now been classified as Non-Performing Asset (NPA), is being claimed at a substantially higher figure[approx in Crores including the interest], allegedly incorporating accrued interest over the years. Given this situation, I seek clarification on the repercussions for me, particularly since the loan was procured when I was a minor. While I am prepared to offer all properties held under my father and mother's names to resolve the debt, I am uncertain about the implications if the auction proceeds fail to cover the outstanding balance. Specifically, I am concerned whether the bank can pursue recovery of the remaining amount from my personal savings and any properties I own. Your insights into this matter would be greatly appreciated. Thank you for your attention.
Asked 1 year ago in Property Law
Religion: Hindu
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10 Answers
suppose after selling all the property still 5lack bank not able to recover what they will do? they will ask me to return? then will i be bound to return the remaining amount? or by selling the asset i brought from my earned money or bank will write off that amount?
Asked 1 year ago
Your father is guarantor
he will be asked to pay balance amount
you don’t have to sell asset acquired by you from your earnings
You are liable as a legal heir to your parents to repay the loan amount to the extent of the property you inherited from them and not beyond that.
Hence the bank can bring only those properties lying on their name to satisfy the loan amount.
They cannot lay their hands on your personal property because you have not obtained the loan.
Hence your personal assets cannot be touched by them.
You are not liable to repay the balance amount that remains as outstanding even after adjusting the sale proceeds of the mortgaged house property.
They have no rights over your personal property since you are not the borrower.
As per law, the bank cannot get order of attachment property of son for the debt of mother or father, because son`s assets will be treated as their respective separate properties.
- Moreover, if you got movable or immovable properties through inheritance then only, your liability to pay the debs, after selling those inherited property.
- Hence, the said bank cannot recover the amount from you in the absence of any agreement or guarantee by you.
- Since, your father is guarantor in the said loan , then bank can take legal action against your father for the recovery of the loan amount.
- Further ,as the property documents are mortgaged with the bank , then the bank can recover the loan amount after selling/auction of the said property
- Further, if there is balance then the bank can approach the court for the recovery of the same , but not against you.
- Your father can approach the bank to settle the loan amount after giving his present financial position .
Not from your personal savings but only from that property which is given as security.
1. You shall be liable to pay the unrecovered outstanding amount lying in the name of your mother and also your father up to the amount equivalent to the value of the properties you have inherited from them after their demise.
2. You won't have to pay a dime from your own earnings and properties for your parents debt.
In the instant case, the Bank will treat it as bad debt and you won't have to pay anything from your earnings and properties as detailed in my earlier post.
In the case of a secured loan, the legal heirs of the borrower generally have a more limited liability compared to unsecured loans. Here's a breakdown:
Secured Loan and Repayment:
A secured loan involves pledging an asset (like property) as collateral for the loan.Upon the borrower's passing, the lender has two options:Recover from the estate: The lender can approach the legal heirs to recover the outstanding amount. However, unlike unsecured loans, heirs are not personally liable for the entire debt.Seize the pledged asset: The lender can repossess the secured asset and sell it through auction to recover the loan amount.
Liability of Heirs:
Heirs are only liable for the secured loan to the extent of the inherited assets.This means if the inherited assets are worth less than the outstanding loan, the heirs are only responsible for the value of the assets, not the remaining debt.
Important Points:
Heirs can choose to repay the loan and keep the asset.They can also disclaim the inheritance, including the secured asset, to avoid any liability.In some cases, the loan agreement might have a clause stating the transfer of liability to heirs upon the borrower's death. It's important to review the loan documents carefully.
Recommendation:
If you're an heir inheriting assets with an outstanding secured loan, it's wise to:
Review the loan agreement to understand the terms and conditions.Get a valuation of the inherited asset.Consult with a financial advisor to determine the best course of action, considering factors like repaying the loan, selling the asset, or disclaiming the inheritance.
Only if you are a guarantor or received any receipts from the claim which bank may recover in future then only bank can claim the same
