Inheriting a property with a mortgage (dědictví)
A situation where, after the borrower's death, both the pledged property and the unpaid loan pass to the heirs. Probate (dědické řízení) is conducted by a notary as court commissioner (Act No. 292/2013 Coll.). The heir is liable for the deceased's debts in full or, with an inventory reservation (výhrada soupisu), only up to the value of the inherited assets (§ 1704 and § 1706 of the Civil Code). The lien remains.
Example
A borrower dies after five years of repaying a CZK 4,000,000 mortgage at 5.00 %; about CZK 3,543,000 is outstanding and the flat is worth CZK 5,500,000. The heir can take over the loan and pay CZK 23,384, or sell the flat and repay the debt. Early repayment because of the borrower's death is free of charge if the death substantially reduces the ability to repay (§ 117 of Act No. 257/2016 Coll.).
In practice
Tell the bank about the death as soon as possible and agree on payments for the duration of the proceedings, which take months; a co-borrower simply keeps paying. If term life insurance assigned to the bank (vinkulace) was in place, the insurer pays off the debt. Stopping payments until the proceedings end is the worst option, as arrears build up and the bank may call in the loan.
How it differs
The inheritance is the outcome; probate proceedings are the procedure at the notary that leads to it. Assumption of debt (převzetí dluhu) is an agreement with the bank that a specific heir takes over the debt; an heir becomes the debtor by law even without the bank's consent, while another heir taking over the debt is approved by the bank based on creditworthiness.
Related terms
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