Mortgaged Property as Element of Inheritance: Theoretical and Practical Aspects

The article is devoted to clarifying the peculiarities of the transfer of ownership of mortgaged property in terms of ensuring an optimal balance of interests between the creditors of the testator, his heirs, and property guarantors. The relevance of the study lies in the need to regulate abuses by heirs and protect the interests of creditors in order to ensure the stability of property turnover in inheritance legal relations. The purpose of the article is to clarify the peculiarities of the transfer of ownership of mortgaged property in terms of ensuring an optimal balance of interests between the creditors of the testator, his heirs, and property guarantors. The article uses historical, comparative, and analytical methods of scientific research. The starting methodological basis of the study is the provision that the scope of the heirs’ obligations for the debts of the testator is limited to the value of the property they have inherited. In other words, the limited liability of heirs is presumed without the need for procedures such as inventory of the estate or summoning the testator’s creditors, which are established in some foreign legal systems. It is argued that the inheritance of rights to property encumbered by a mortgage has specific features, which are manifested, firstly, in the narrowing of the legal possibilities for applying the general procedure for foreclosure on the mortgaged property and, secondly, in additional grounds for termination of the mortgage that are not directly provided for by special law. Moreover, additional grounds for termination of a mortgage in inheritance legal relations do not violate the rights and interests of the testator’s creditors, who have the right to demand fulfilment of the obligation both from the heir who has accepted the inheritance and from the notary (consular office). In addition, the law establishes long-term deadlines for creditors to file their claims. Finally, the absence of a certificate of inheritance from the heir who has accepted the inheritance does not deprive the testator’s creditor of the opportunity to apply to such a person with a claim for foreclosure on the inherited property that is the subject of the mortgage. The position is defended that the mortgage is terminated if the creditor of the testator fails to comply with the six-month period for applying to the heirs of the debtor, established in Article 1281 of the Civil Code of Ukraine. In this case, the proper way to protect the rights of the heirs is to terminate the mortgage and lift the prohibition on immovable property. It is argued that in the event of the death of the debtor under the principal obligation, the property guarantee is terminated in accordance with Part 1 of Article 523 of the Civil Code of Ukraine under the following conditions: the death of the debtor under the principal obligation secured by a mortgage; the acceptance of the inheritance by the debtor’s heir in the manner and within the time limits specified by civil law; the property guarantor’s refusal to ensure the performance of the obligation by the new debtor – the heir; the property guarantor and the debtor’s heir are different persons.