Answer to a question from a reader

Must I sell my late mother's house to cover her debts?

The short answer

You should make an application to the bank to take over the existing home loan, but you would have to meet the bank’s qualifying criteria.

The whole question

Dear Athalie

As my mother's only living child, can I be forced to sell her house to cover the remaining bond of R350,000 and her other debt that amounts to R80,000? Does it make a difference if the debt is secured or not? Can I just continue with the payments of the debt and the bond?

The long answer

Firstly, a deceased estate is the sum total of all the assets and liabilities (or debts) that a person had at the time of their death. The only person authorised to handle the assets and liabilities of a deceased estate is the person appointed as the Executor, for estates valued above R250,000; or, the person issued the Letter of Authority, for estates valued at less than R250,000. The Master of the High Court appoints the executor or issues the letter of authority to a person who has been nominated by the heir/s to wind up the estate. Winding up the estate means seeing that all debts are paid and that all heirs receive what is owing to them.

It is a complex process, that falls under the Administration of Estates Act, with many steps:

A death must be reported at Home Affairs within 14 days by completing a death notification (B1-1663) form. Different sections of this form must be completed by the person reporting the death, a medical doctor (or traditional healer), and a Home Affairs official (or a member of SAPS). Home Affairs will then issue a death certificate.

The documents that you need to report the estate to the Master of the High Court in order to have an executor appointed are:

  • Death Notice (Form J294) to be completed and signed by surviving spouse (if applicable) or close relative of the deceased;
  • A certified copy of the death certificate;
  • Inventory (Form J243) which is a list of all the assets and debts belonging to the deceased;
  • The original will, if your mother left a will;
  • Nomination by the heirs (that would be you, as the only living child) for the person to be appointed as an executor;
  • Undertaking and Acceptance of the Master’s direction (Form J155) which must be completed and signed by the executor appointed by the Master of the High Court;
  • Certified copy of the nominated executor’s ID;
  • Certified copy of the ID of the deceased;
  • Certified copy of marriage certificate and certified copy of ID of surviving spouse (if relevant).

To answer the question about secured or unsecured debt:

Secured debt is debt that is connected to particular assets. This is the case with a home loan, where the house is the security for the repayment of the loan, which falls due when the person who took out the loan dies. It means that the creditor (the bank, in this case) can repossess the house and sell it to pay off the debt, as there is no bond insurance. Secured debt is given priority over unsecured debt, but debt to SARS takes priority over other debt.

Unsecured debt is debt like credit card debt, which is not tied to any asset. With unsecured debt the lender cannot seize any assets but must go the usual debt collection route. You could approach the lender and ask that you be allowed to take over your mother’s debt and continue paying it, which may well be in their interests too, to avoid legal fees and so on.

In a 2018 article, Randles Attorneys say the following: "The heirs are to make application for a bond immediately after the estate has been reported in order to ensure that they qualify to 'take over' the existing bond. This is in the case where the bond is not settled by way of a cash payment or sold out of the estate."

As you do not want to sell the house, you should make an application to the bank to take over the existing home loan, but you would have to meet the bank’s qualifying criteria. If you did not meet the bank’s criteria, the executor might have to sell the property to repay the bank. But in order to do that, the executor would need your written consent to sell, and the Master would need to be satisfied that the house was sold at market value. The transferring attorney would have to get a certificate from the Master saying that he had no objections to the transfer of the house to the buyer.

Before the executor can transfer any fixed property to you as the heir, he or she must lay out the Liquidation and Distribution Account (L&D) inspection by the general public so that any creditors can come forward. The L&D Account must be approved by the Master within six months of the executor being appointed.

The property would need to be transferred to your name by a conveyancing attorney. They lodge documents with the Deeds Office that prove that you are the rightful heir and that the transfer of ownership to you complies with Section 42 (1) of the Administration of Estates Act.

As the heir, you would not have to pay transfer duty, and SARS would issue a transfer duty exemption certificate when asked to do so by the conveyancing (transferring) attorney. But the deceased estate would still be responsible for paying the conveyancing costs, the Deeds Office fees, and the rates and levy clearance certificates from the municipality.

As you can see, none of the administrative processes around deceased estates is easy, but it’s best to get going as soon as you can.

Wishing you the best,

Answered on July 26, 2022, 10:11 a.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.