A mortgage in Kazakhstan does not automatically end after the borrower's death: if the apartment passes to heirs, they also inherit the loan obligations. This was explained by the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, reports infohub.kz.
Mortgage loans are often taken out for long terms, and during that time anything can happen — including the death of the borrower. As the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market explained, in such a situation the mortgage does not automatically "disappear." If the deceased's relatives accept the inheritance, they acquire the rights to the apartment along with the obligations under the mortgage loan.
After accepting the inheritance, the heirs are liable for the deceased's debts as joint debtors. However, each of them is liable only up to the value of the inherited property. Before the inheritance is accepted, creditors may file claims with the executor of the will or the trustee managing the estate.
Since the mortgage does not disappear after the borrower's death, the apartment remains pledged until the loan is fully repaid. If the heirs have accepted the inheritance but avoid registering the apartment or rights to it, creditors may demand registration through compulsory enforcement. The bank may also foreclose on the pledged real estate in the cases and manner provided by law and by the loan and mortgage agreements.
If there are no heirs or all of them have renounced the inheritance, the property is deemed escheat and passes to communal ownership at the place where the inheritance was opened. However, the transfer of property to communal ownership does not terminate the deceased's obligations to creditors and does not deprive them of the right to file claims under the law.
Six months from the opening of the inheritance are allowed for accepting it. While inheritance rights are being formalized and the circle of heirs is being determined, the bank must consider suspending the accrual of interest and penalties for overdue payments, as well as other related charges. After the inheritance is accepted, mortgage payments continue under the terms of the loan agreement and the established payment schedule.
Important: the bank has no right to demand early repayment of the mortgage solely on the grounds of the borrower's death. Such a demand is possible only in cases provided by law and the loan agreement. If the heirs accept the mortgaged apartment, they must repay the loan under the terms specified in the agreement.
If the deceased borrower had guarantors, their obligations to the bank terminate. Co-borrowers face a different situation: they must continue repaying the loan in accordance with the agreement's terms even after the main borrower's death.
Thus, the borrower's death does not release anyone from mortgage obligations. If the heirs accept the apartment, the loan obligations pass to them along with it. Co-borrowers continue to be liable for the loan under the agreement's terms.