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When inherited real estate is subject to a mortgage with a bank, the execution of a will cannot proceed unless a clear solution for handling the mortgaged asset is determined. This is a fundamental step to protect the lawful rights of heirs and to minimize potential legal disputes.
Initially, the heirs must agree on whether to retain the property and continue servicing the debt or to sell the mortgaged real estate to settle the outstanding loan. Choosing the appropriate solution plays a decisive role in the legality and efficiency of the inheritance settlement process.
In cases where heirs wish to retain the property due to its practical use, sentimental value, or investment potential, Vietnamese law allows the acceptance of both the inherited asset and the associated financial obligations. Pursuant to Article 615 of the 2015 Civil Code, heirs are responsible for fulfilling property-related obligations within the scope of the inherited estate. Accordingly, heirs must demonstrate their financial capacity and negotiate with the bank regarding the transfer of debt obligations, including the execution of relevant credit agreement addenda.
Once the loan has been fully settled, the procedure for deregistering the mortgage shall be carried out in accordance with Decree No. 99/2022/ND-CP, thereby establishing full ownership rights over the inherited property.
Conversely, where heirs lack the financial capacity to repay the debt or have no intention of using the property, selling the mortgaged real estate is often the most practical solution. This approach helps avoid penalty interest and reduces the risk of internal disputes. Such transactions require the consent of the bank, the heirs, and the transferee, with the payment proceeds prioritized for debt settlement before any remaining value is distributed.
Under Article 307 of the 2015 Civil Code, the remaining value of the property after deducting debts and reasonable expenses constitutes the actual inherited estate. This amount serves as the legal basis for distribution in accordance with the will or applicable legal provisions.
In practice, improper handling of mortgaged real estate under a will may lead to prolonged procedures and significant legal risks. GIVLAW provides comprehensive legal consultancy and representation services in inheritance matters, assisting clients in selecting optimal solutions, liaising with financial institutions, and safeguarding the legitimate interests of heirs.
