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Death or insolvency clause in a mortgage

Jacksonville, FL |

My late father left his house & mortgage to me & my sister. In his mortgage there is a Death or Insolvency clause that reads: The death of any grantor will not be an event of default if as a result of the death of a grantor The indebtedness will be fully covered by credit life insurance. What does this mean? Thank you for any advise you can give.

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Attorney answers 2


There are many provisions in a mortgage, which must be read together and in context. Because of this the only way that you will get a complete answer to your question is to hire a lawyer to read your entire mortgage and advise you on it. That being said, I would guess that one of the events of default under your father's mortgage is the death of the mortgagor. The provision you quoted is one that lessens the impact of the default on death provision by saying that it does not apply if the mortgagor has a credit life insurance policy. A credit life insurance policy is a decreasing term life insurance policy in which the amount of insurance decreases at the same rate as the principal balance of the mortgage. In years past, banks and mortgage companies frequently sold credit life insurance as an adjunct to issuing a mortgage. If you want further clarification, you should consult an experienced real estate lawyer in your area for advice.

Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.


The mortgage will govern the relationship between your father's estate and the lender for the property. If you and your sister intend to keep the property, then hire and attorney to renegotiate the terms of the mortgage or simply pay off the remaining balance. If you do not intend to keep the property, then the property could be sold in the probate of your father's estate and the equity split between you and your sister. Either way, I think you should consult an attorney.

This response does not create an attorney-client relationship. Unless you are already a client of the Law Office of Preston H. Oughton, pursuant to an executed fee agreement, you should not use, interpret, or rely on this response as legal advice or opinion. Do not act on any information in this response without seeking legal advice. Preston H. Oughton (904) 854-6336.