How do you settle the deceased account against which liability remained and thereafter the relevant collateral security?

Let me first define the phrases:

Deceased Account: Live account of a person who died

Liability: Loan against the property which is outstanding at the time of the persons death

Collateral Security: The property against which the mortgage was availed

There can be three ways to deal with the situation:

Case1: Legal Successor of the property is ready to deal with the Mortgage.

In this case the financial institutions can approach the family of the deceased and get information about any WILL if available. In case the WILL is missing the legal successor of the property can be indentified as per the law of the land (Wife, Children, parents etc.). They can be asked to settle the mortgage and take possession of the said property. They can also be asked to transfer the mortgage in their name and continue with the same.

Case2: In case the legal successors are unable to settle or service the mortgage.

In such a situation with the consent of the legal successors the property can be sold in open market through brokers or aution as desired. The proceeds from the same can be used to settle the mortgage and the remaining sum, after deduction of expenses incurred in selling the property, can be forwarded to the legal successors.

Case3: In case no legal successor can be identified.

In such a situation a Public Notice for identifying the successor can be published. After giving sufficient time if the successor cannot be identified the Financial institution can go for an open market sale of the propety. The proceeds can be used to settle the mortgage and excess can be kept in a suspense account for reasonable amount of time for someone to claim. If no claims arise the amount can be dealt with as adviced by the central bank / governing authority of the country.

These are my general views on the situation based on my experience in the field. Kindly refer to the local laws pertaining to such a situation before initiating any action.