Prince asks: My mother had back rooms built on her stand in Meadowlands with a loan from the Perm bank. She passed away before the loan could be paid off. The house was insured but not with cover for death. I still have to pay off the balance as I cannot gain ownership of the house because the title deed of the house is held by the bank. Is it fair that they had made her take insurance which did not cover death?
Maya answers: This question raises a very important point — inheriting a property can turn out to be an immense financial burden.
It is not a legal requirement for a person to have life insurance if they have a home loan or any loan for that matter. A bank may insist on life cover if the value of the loan is relatively high compared to the value of the property; however, this is at the bank’s discretion. It is therefore very important that if you are to inherit property that you understand the liabilities on that property and whether the person has other investments which can be used to settle the debt on the property or whether they have taken out life cover to settle their debts.
As you rightly put, if you want to take ownership of the property you will have to settle the debt otherwise the bank has the right to sell the property at whatever price it can achieve to settle the debt on the house and pay you the remaining proceeds. If you are to inherit property that has a debt and the person does not have life cover, you are able to take out cover on their behalf if you would like to retain the property.