Not upheld: Mortgage administration / arrears handling complaint against Allied Irish Banks Plc

Decision detail

Summary

Mr L complained that AIB refused to transfer his joint mortgage into his sole name following the death of his former partner Ms M, and that AIB improperly disclosed information about the mortgage to Ms M's executors. The ombudsman found that although Mr L acquired sole ownership of the property through survivorship rules, the mortgage liability situation was more complex. Under the joint and several mortgage terms, Ms M's joint liability passed to Mr L upon her death, but her several liability remained with her estate. Since there is an active court dispute between Mr L and Ms M's estate over the beneficial ownership and interest in the property, AIB reasonably refused to make changes to the mortgage until the dispute is resolved. The ombudsman concluded that AIB's communication with Ms M's estate was not improper as the estate remains severally liable for the mortgage and has a legitimate interest in it. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman distinguished between the ownership of the property (which passes to the surviving joint tenant under survivorship rules) and liability for a joint and several mortgage (where the joint liability passes to the survivor but the several liability remains with the deceased's estate). Since there is an active dispute between Mr L and Ms M's estate over the ownership and beneficial interest in the property, and court proceedings are ongoing, it was fair and reasonable for AIB to refuse to transfer the mortgage into Mr L's sole name until the dispute is resolved. Transferring the mortgage would pre-empt the outcome of the dispute and could leave AIB in a worse position if Ms M's estate is awarded the property. Ms M's estate remains severally liable for the mortgage and therefore has a legitimate interest in receiving information about it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website