The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions in an article in the following Q&A which was published by the Mint Newspaper on 12th March, 2022 and the online edition of the same can be found here.
One of my relatives has reverse mortgaged his house, he died recently. It is understood that there is a specific will insisted by the banker and got executed at the time of reverse mortgage, wherein it says, “the property will devolve on my wife with absolute rights” and so on. Are the legal heirs eligible to claim for the rights of the said property?
It is advisable to verify the terms and conditions of the reverse mortgage. Typically, in a reverse mortgage, where a property has been mortgaged, the bank or financial institution has the right to sell the property after the death of an individual and the excess amount is remitted back to the legal heirs. However, since the property has been bequeathed under a will, the legatee(s) mentioned therein would be liable to the excess monies, if any, after the sale of such property. In this scenario, the legal heirs may consider purchasing the property from the bank.