Introduction: A Beijing man leaves behind a house after his death, but his uncle, who paid off part of the mortgage, cannot inherit the property. The court decides that the Civil Affairs Bureau becomes the estate administrator? What legal knowledge is involved here, and lawyer Dao Hua explains.

Case Summary

Yang, a 38-year-old man from Beijing, died leaving behind a commercial house with an outstanding mortgage. Both of his parents were deceased, he was unmarried and had no children, no grandparents, and no siblings, and he had never left a will. This means, from a legal standpoint, Yang had no heirs.

According to a report in the Beijing Daily, Yang purchased the house for 1.15 million yuan at the end of 2014 and applied for an 800,000 yuan public housing loan in March 2015, provided by the Beijing Bank Shaoyaoju Branch and guaranteed by the Beijing Housing Loan Guarantee Center.

Yang died in 2016, and since he had no parents, no other direct relatives, his uncle thought he could be the heir to Yang's estate and paid off part of the loan. Later, because the Beijing Housing Loan Guarantee Center was Yang's creditor, the uncle approached the center, hoping to transfer the house into his name.

And from January 26, 2019, to November 22, 2019, the house failed to repay the loan for 10 consecutive periods. Therefore, the Beijing Housing Loan Guarantee Center fulfilled its guarantee obligations and repaid the remaining principal, interest, and penalties. On November 22, 2019, the Beijing Housing Loan Guarantee Center repaid more than 760,000 yuan, and thus the mortgage on the commercial house was fully repaid.

Subsequently, the Beijing Housing Loan Guarantee Center applied to Fengtai Court to have the Fengtai District Civil Affairs Bureau become the estate administrator of Yang.

On April 28, the court ruled that the Fengtai District Civil Affairs Bureau would become the estate administrator of Yang.

After the incident was reported, it sparked widespread discussion, and the estate administration system once again attracted extensive attention.

What is an estate administrator?

"Estate administrator" is a new system added to the "Civil Code" that came into effect on January 1, 2021, which emphasizes the function of managing property and can, to some extent, avoid problems that may arise in inheritance disputes.

Through the estate administrator's management, distribution, and civil liability issues related to the inherited property, it ensures the proper management, reasonable distribution, and debt repayment of the inheritance process, better protecting the interests of heirs and creditors.

Why couldn't Yang's uncle inherit the house in the above case?

According to the relevant provisions of the "Civil Code", China's inheritance is divided into statutory inheritance and will inheritance. If there is a legally valid will after the deceased, the inheritance is distributed according to the will. If there is no will, it is inherited according to the statutory inheritance order.

The order of statutory inheritance is divided into the first order and the second order, where parents, spouse, and children are all in the first order, and grandparents, great-grandparents, and siblings are listed in the second order. When there are no heirs in the first order of the deceased, the property is inherited by the heirs in the second order. When the deceased's property has no heir, it belongs to the state for public welfare purposes; if the deceased was a member of a collective ownership organization before death, it belongs to the collective ownership organization where the deceased was located.

In the above case, since Yang did not leave a will before his death, it can only be inherited according to the statutory order. As the uncle does not belong to the statutory heirs, he cannot inherit Yang's property.

It is worth mentioning that the "Civil Code" mentions a "discretionary share of inheritance", which means that for those who rely on the deceased for support or those who have provided more support to the heirs, an appropriate share of the deceased's inheritance can be obtained. That is to say, if Yang's uncle can prove that he has a foster relationship with Yang, he can appropriately receive a share of the inheritance.

Can a nephew inherit his uncle's estate?

The answer is yes. The "Civil Code" Article 1128, paragraph 2, has added a substituted inheritance system. If the deceased's child dies before the deceased, the direct descendants of the deceased's child shall substitute for inheritance. If the deceased's siblings die before the deceased, the children of the deceased's siblings shall substitute for inheritance.

According to this article, the substitutionary inheritance of nephews and nieces requires that three conditions be met simultaneously: first, the deceased has no first-order heirs, and the deceased child has no descendants to substitute for inheritance; second, the deceased's siblings die before the deceased; third, the deceased's siblings and their children have not lost the right of inheritance.

From "executor of the will" to "estate administrator"

The executor of the will is a new concept added to the "Civil Code". Previously, according to Article 16 of the "Inheritance Law" (which has been abolished), there was an executor of the will.

Article 1145 of the "Civil Code of the People's Republic of China" states that after the inheritance begins, the executor of the will shall be the estate administrator; if there is no executor of the will, the heirs shall promptly elect an estate administrator; if the heirs do not elect, the heirs shall jointly act as the estate administrator; if there are no heirs or all the heirs renounce inheritance, the civil affairs department or village committee at the deceased's place of residence before death shall act as the estate administrator.

The executor of the will and the estate administrator are two different concepts. Assuming that someone is the executor of the will before the deceased, then after the deceased's death, this executor becomes the estate administrator. Of course, there are also situations where there is no executor of the will, no heirs, or all the heirs renounce inheritance.

In the above case, Yang's situation belongs to "there are no heirs, and the civil affairs department at the deceased's place of residence before death acts as the estate administrator".

How will the Civil Affairs Bureau handle the house after becoming the estate administrator?

The most concerned issue should be how the Fengtai District Civil Affairs Bureau will dispose of Yang's property after becoming the estate administrator of Yang. This involves how the estate administrator manages the estate.

Article 1147 of the "Civil Code of the People's Republic of China" states that the estate administrator shall perform the following duties:

(1) Inventory the estate and prepare an inventory list;

(2) Report the estate situation to the heirs;

(3) Take necessary measures to prevent the damage or loss of the estate;

(4) Handle the deceased's debts and liabilities;

(5) Divide the estate according to the will or in accordance with the law;

(6) Implement other necessary actions related to the management of the estate.

Therefore, in the above case, if the civil affairs bureau takes over a house with an outstanding mortgage, it should first help repay the debt. Since the Beijing Housing Loan Guarantee Center has fulfilled its guarantee obligations and repaid the loan, the civil affairs bureau as the estate administrator should fulfill its repayment obligations to the center. And since Yang's uncle had repaid part of the loan, the civil affairs bureau should also repay that part of the loan to the uncle. If there is still an outstanding loan after the above debt is settled, it will belong to the state for public welfare purposes.

At the same time, the "Civil Code" also stipulates the responsibilities and remuneration of the estate administrator.

Article 1148 of the "Civil Code of the People's Republic of China" states that the estate administrator shall perform his duties in accordance with the law, and if he causes damage to the heirs, the donee, or the creditor due to intentional or gross negligence, he shall bear civil liability.

Article 1149 of the "Civil Code of the People's Republic of China" states that the estate administrator may obtain remuneration in accordance with the law or as agreed.