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Joshua, Lawyer
Category: Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Probate & mortgage responsibility

Customer Question

Hello, my father passed away late last year and only now is Probate almost complete (I would expect within 2-3 weeks). He has had a mortgage on the family home since 1980 which was originally taken out to support his partnership family farm between himself and his cousin. The farm had been paying the mortgage each month as it was the farms debt but since my father has passed away, his cousin/ the farm has ceased paying the mortgage and are refusing to pay. My fathers involvement in the partnership was dissolved after ill health for two years and he took out a life insurance policy to cover the mortgage should he pass away so that the family were not liable. However, I still believe that the debt is directly related to the farm and therefore regardless of this life insurance, that they should pay the remaining balance of the mortgage. I appreciate I may only feel this way because my dads cousin isn't exactly popular within the family but I still feel that there may be a case to be made. There were family murmurs of an 'gentlemens agreement' having been made but my dads cousin isn't the kind of person who is likely to honour this agreement unless we can find something in writing which at the moment is unlikely. Do we have a case? Thank you for your help.

Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.May I clarify that the mortgage was taken out whilst your father was a partner in the farm business from what you say please?If that is correct, when he left the partnership was the partnership dissolved or was he released from the partnership with the partnership carrying on without him?Finally was any agreement reached as to debt on dissolution / his release from the partnership to your knowledge?
Customer: replied 3 years ago.

Hi Joshua, thank you for your reply.

The mortgage was taken out whilst my father was a partner in the farm yes. The partnership, from what I understand, was dissolved fully as it was only owned by my father and his cousin and therefore wasn't able to continue as only one owner? However, I believe it still trades under the same legal name - whether this makes a difference I am not sure. In terms of debt, I can verify with the family accountant if there were any formal (written) agreements on my father being removed of responsibility for debts (if this is what you are asking) although I believe that this is not present and as previously mentioned, my family believe that it was this reason why my father signed the forms to dissolve the partnership in the last few months of his life so that the family again would be protected should anything have happened to him. I have not been able to arrange a meeting with his accountant to date, but also before stirring up this intention of pursuing my fathers cousin, I wanted to clarify the possible position my family were in because both the accountant and solicitor of my father are also the farms/ my fathers cousins too.

Thank you for your help.

Expert:  Joshua replied 3 years ago.
Thank you. If there was a dissolution agreement for the partnership this could be very important because such agreements will often contain indemnity provisions whereby one partner may indemnify the other in respect of continuing debts that exist at the time of the dissolution. This is particularly possible if it is the intention of the remaining partner to continue the business. Accordingly, it is important to ascertain what documents, if any, was signed by your father and his business partner in order to ascertain what terms if any were provided for in respect of the ongoing debts.If no formal dissolution agreement was signed, the starting point is that the partners jointly own partnership assets and are jointly responsible for any partnership debt. As above, it may be that decisions were made between the partners as to how to divide partnership assets and debt but if not, the starting point is that your father would be entitled to 50% of any partnership assets and will be responsible for 50% of the partnership debt. This is a starting point and this can be shifted by reference to evidence such as agreements between the partners which is why ascertaining what documents were signed or failing which what evidence of agreements there may have been is so important.Unless your father specifically agreed to be responsible for the debt on his own which seems unlikely given what you say of his intentions, his former business partner cannot simply avoid liability for a debt that arose under the partnership. Accordingly, a conversation with the former partnership accountant will likely be crucial and essential in order to ascertain your father's position and in turn so you can ascertain the position of his estate. It is not unusual for there to be disputes regarding division of property and debt following the dissolution of the partnership and it may be that depending upon the outcome of your meeting with the accountant, you may need to seek specialist representation to secure your father's estate's position, particularly if matters were dissolved in in less formal manner than perhaps they should have been. Hopefully however, you will find that your father put in place a formal dissolution agreement which provided for the division of partnership assets and liability partnership debt which will clarify matters and minimise the possibility of disputes between your father's estate and his former business partner.Until the matter becomes clearer and / or can be resolved, it is important to liaise with the mortgage lender because if the mortgage is in your father's sole name, pri***** *****ability in respect of the mortgage as between the mortgage lender and your father rests with your father's estate. Mortgage lenders will typically be sensitive to situations following an individual's death and will likely give you some breathing room if it is necessary but ultimately the lender will seek to understand how it's mortgage is to be repaid so opening dialogue with them at an early stage is likely to be beneficial.I hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me.
Expert:  Joshua replied 3 years ago.
Can I help you with anything else or has the above answered your questions satisfactorily? I would be pleased if you could drop me a brief note to let me know if the above was helpful.
Expert:  Joshua replied 3 years ago.
If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though