Can the bank continue to collect the mortgage after the owner’s death?

by Alex Musk

Given the doubt about whether a mortgage loan can continue to be collected by the bank after the holder’s death, recent rulings in this regard seem to say that such action by the bank is not possible.

If the mortgage holder dies, the bank is legally obliged to contact the insurer to pay off the full amount of the mortgage loan. In this way, the Supreme Court itself dictates it, and this has been applied in the Investigating Court number 6 of Salamanca. Specifically, the bank is condemned to return to the heirs of the deceased person all the loan installments that have been collected after his death, 3,200 euros to be exact.

The sentence has been clear. The judge agrees with the relatives of the deceased person. However, he does not consider that the bank breached the contract it signed with the deceased owner since it was not proven that the heirs communicated the death before the loan repayment date. Despite this, it recognizes the damage that it may have caused to the relatives of the deceased, in such a way that it condemns the entity to return the money that was collected. However, it will not be necessary to pay the expenses generated by the trial.

For their part, the plaintiffs made it clear that they verbally communicated what had happened to the bank, and even so, the bank continued to collect the expenses corresponding to the mortgage. His lawyer also argues that the existence of linked life insurance was more than enough for the entity to know of the death of the holder of the mortgage loan so that he could immediately contact the insurer to settle the said loan. . Therefore, it seems to him a contradictory resolution. He considers that the bank should have received a much worse sentence.


The lawyer denounces, on the other hand, that this type of ruling discourages consumers from claiming their rights, since they are going to have to make an outlay that, in most cases, will be higher than the reward they will obtain in court. We find that the judges seem reluctant to impose costs for reasons that escape us and in a way that is contrary to the doctrine of the Supreme Court and the European courts. This happens both in mortgage expense claims and in this case.

In this specific case, it is known that the client died in November 2016, and yet the bank continued to charge the relatives of the deceased for mortgage payments and a personal loan until June and July of the following year. If that were not enough, the plaintiffs showed that the deceased owner had taken out life insurance for credit amortization. Financial companies guarantee the collection of the debt in the event of disability or death.

Faced with this injustice, the heirs sued the financial institution for breach of contract and acting against good faith and respect for morality, requesting damages based on the doctrine established by the Supreme Court in 2017.

Unfortunately, the court in question did not find a breach of contract or reprehensible conduct since it could not be shown that the bank was aware of the death of the mortgage holder at the time the payments were collected. Finally, although the sentence is favorable to the plaintiffs, the bank is not condemned to pay the costs of the trial, which are probably much higher than the 3,200 euros that the entity must return to the heirs.

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