Is it any wonder banks stopped doing lifeloans?

Brendan Burgess

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Bank entitled to take home of woman who died in 2008 with unpaid debt, court rules

High Court rules Bank of Ireland can take over home
www.irishtimes.com

Bank of Ireland gave this woman €60,000 in 2006.
She died in 2008.
In 2015 the bank called on the Executrix to repay the loan + interest.
In April 2021, the Executrix got a grant of probate.
BoI commenced repossession proceedings in 2019

The Executrix claimed it was statute barred.
The judge said it was not and granted an order for possession.

But there is €90,000 interest due and the judge said that full hearing would be required to determine if the claim for the interest is statute barred.
 
As I understand it, the majority of life loans are repaid without quibble by the estate.

But in a case like this, the High Court costs are going to be far higher than any amount BoI might recover.

And they might not get their interest.
 
What are the mechanics of these loans where someone dies before they fall due?

Is there a note on the property register like a regular mortgage that prevents sale without the bank's permission/knowledge?

I'm wondering how many banks are unaware for years/decades that someone has died and these scenarios then arise.
 
arbitron said:
What are the mechanics of these loans where someone dies before they fall due?
Click to expand...

My understanding of these loans is that they ONLY fall due for repayment when the person dies. So I too would be curious as to how the lender is supposed to find out that their customer has died. Maybe it's a procedure like pension companies writing out to pensioners at intervals requesting that they fill out a form verifying that they're still alive.
 
arbitron said:
I'm wondering how many banks are unaware for years/decades that someone has died and these scenarios then arise.
Click to expand...
Especially if someone dies relatively young.

I don’t know why the state doesn’t periodically publish a database of the main details of death certificates so that lenders, pension providers, and life insurance providers can take action.

The state already shares information internally so that public service and social welfare pensions get stopped.
 
There was no suggestion in the court report that the bank was not aware of the death.

There is some requirement for a bank to do something within 2 years of the death of a borrower. I can't remember what it is. But I have heard of banks taking legal action against an estate to meet the two year deadline.

Brendan
 
Here it is

Civil Liability Act 1961

9.—(1) In this section “the relevant period” means the period of limitation prescribed by the Statute of Limitations or any other limitation enactment.

(2) No proceedings shall be maintainable in respect of any cause of action whatsoever which has survived against the estate of a deceased person unless either—

(a) proceedings against him in respect of that cause of action were commenced within the relevant period and were pending at the date of his death, or

(b) proceedings are commenced in respect of that cause of action within the relevant period or within the period of two years after his death, whichever period first expires.
 

There is a similar procedure, albeit, it's a bit more subtle.

I think BoI ask for an updated specimen signature, or other similar "standard" things, from the Borrower, from time to time.

Failure to reply, attracts queries from the Bank.
 

Annual Questionnaire - Spry Finance

Annual Questionnaire You will be required to complete a short Annual Questionnaire just to ensure that your circumstances have not changed in the past year and to confirm that you have maintained your house insurance. When returning the Annual Questionnaire each year, you will be asked to...
www.spryfinance.ie
 
I would have no sympathy for the Executrix on this one, yes the bank should have acted sooner but the Executrix would have been aware of this debt and the interest accruing and should also have acted sooner to avoid unnecessary interest.


The job of the Executrix is to deal with the affairs of the deceased in a timely manner, 13 years to get probate seems totally unreasonable. Unless there is some exceptional circumstances it would also seem very negligent of the Executrix to not have dealt with this debt soon after Mrs Cunningham's passing. Had she done so the interest payable would be a small fraction of the €90K owed today.
 
The only people who seem to have an issue with these life loans/equity release products are greedy beneficiaries hoping for their inheritance.

A potentially elegant solution is for the children/beneficiaries to fund the interest payments.
 
6. The issue in this case is whether these proceedings have been brought within time. To
that extent, this case raises a potential conflict between the provisions of Section 9 of the
Civil Liability Act, 1961 and Section 13 of the Statute of Limitations Act, 1957. If the former
applies, then a two-year limitation period is applicable and the case is statute barred, while if
it is the latter, the appropriate limitation period is twelve years, in which case the case is not
statute barred.

(v) 30 th of May 2011, the plaintiff commenced writing to the solicitors who had
represented the estate, asking that an executor be appointed. Nothing happened
until November 2014, when the plaintiff wrote to the defendant personally asking
her to extract a grant of probate. They also sought possession. Thereafter they
continued to write every year, sometimes twice a year until 2019, when Robert
O’Byrne was appointed administrator ad litem, by the High Court in July, in order
to extract a grant of probate.

The timeline continued as follows: –.

(vi) 20th of September 2019, solicitors for the plaintiff wrote to Robert O’Brien.

(vii) 23rd of September 2019, the special summons was issued. (viii) 14th of November 2019, the Master struck out the summons.
(ix) 9th of December 2019, the High Court set aside the order of the Master. (x) 21st of April 2021, the grant of probate was extracted by Robert O’Brien.
(xi) 21st of October 2021, the Master substituted the defendant for Robert O’Brien.

7. As can be seen, no steps were taken by the plaintiff to realise their security for a period of excess of six years. There is no doubt that these proceedings seeking possession in September 2019, have focussed the parties’ minds.
 
The plaintiff says it was open to the defendant to move quickly to
extract a grant of probate in order to address the liabilities of the estate. The property could
have been sold or finances raised to pay off the life loan. The defendant took no steps and did
not lodge an application to the probate office until very late in the day. Mr. McGuckian BL,
for the bank, urges me to consider that if there had been any prejudice by the delay, that
should lie at the feet of the defendant.

He quotes from Canny, Limitation of Actions (3rd edition, Round Hall Press, 2022), that the defence of laches only arises where the relief
sought is equitable. In this case an application for possession of property is not an equitable
relief.
 
28. There has been no explanation for the enormous delay in this case. Mr. McGuckian
very fairly says that he cannot go beyond the affidavits. It was open to the bank to explain the
delay, but they have chosen not to. What the bank has done however is to try to blame the
defendant, for not acting sooner. I do not accept that argument. If it were not for other factors,
I believe that it would be at least arguable that the defence of laches arises in this case. An
opportunity of dealing with the case in a different way, from the plaintiff’s perspective, may
have arisen.
 
It is difficult for a bank to be right in these circumstances.
If they issue proceedings within two years, they will be considered heartless and it will cost them a lot.
If they don't issue proceedings, they will be accused of enormous delay.

The responsibility should lie at the door of the Executrix.

But in these cases, the Executrix may be living in the house and has nothing to gain from taking out probate.

Brendan
 
Considered heartless by who? They should engage with the Executor within a reasonable timeframe. If that fails they should send a letter before action to the Executor and then start proceedings. It's not really a dilemma because the alternative is likely to mean not recovering the funds.
 
Two things that Bank of Ireland did with the creation of the LifeLoan:
1. The borrower was required to reply to a letter which was essentially confirming that they were er still here
2. Respecting the borrowers decision to take a LifeLoan, the borrower had to have a Will and an executor.

Bank of Ireland withdrew the product and it is highly likely that monitoring has just stopped.
 
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