Debt and death - property and personal liability

david-menzies By David Menzies, Director of Insolvency

19 May 2017

Property is often bought in joint names with title automatically passing to the survivor on the death of the first joint owner. But what happens when the deceased has debt and is declared bankrupt? David Menzies looks at a decision in Glasgow Sheriff Court which considered this issue.

A case brought before Glasgow Sheriff Court has served as a useful reminder to how debt, death and a common form of heritable property title in modern society interact with each other.

The case of Chalmers v Maria Jennifer Machin [2017] SC GLA 29 considered whether an individual who had held title jointly with a survivorship provision also had a personal liability of the debts of the deceased.


The late Colin Machin was the owner of a one-half share of a flat in Glasgow owned jointly with his spouse “equally between them and the survivor of them”. Mr Machin died on 25 June 2014 with his spouse appointed executrix on his estate.

Nearly two and a half years after Mr Machin died, his spouse applied to the Accountant in Bankruptcy for sequestration of his estate with debts at the date of death estimated at £49,452. The sequestration was awarded on 21 October 2016.

The flat was valued at £150,000 and at the time of the case coming before the court, Mrs Machin had marketed the flat for sale with an offer having been accepted (of £178,500) although missives were not concluded. The net free equity, after deduction of a secured debt, was estimated at £53,995, of which the deceased’s one-half share is calculated to be £26,998.

The trustee sought to recover from Mrs Machin the sum of £26,998, being the value at the date of his death, of the deceased’s half share of the flat, as acquired by her under the survivorship clause in the title.

Death and debt

Sheriff Reid notes in his judgement that the title and ownership provisions are common place in modern conveyancing transactions. He highlights that this is a typical form of special destination, whereby the title holder is specifically directing or “providing” for the order or series of heirs who are to succeed to their share, without regard to the normal order of succession under rules of intestacy. The person to whom the title share is to be transferred is referred to as the ‘substitute’, or more properly in law ‘heirs of provision’.

Sheriff Reid concluded that ‘once it is appreciated that the defender in the present case is properly characterised as an heir of provision, her liability becomes clear.‘

In a principle which has been established in Scots law for over 250 years, an heir of provision succeeding under a special destination incurs a passive liability to the deceased’s unsatisfied creditors, to the extent of the value of the succession.

This is further explained as while a destination of a title to heritage is not formally a testamentary writing, it has testamentary effect, in the sense at least that it takes effect upon death and is comparable to a legacy or bequest.

It is well-recognised that the debts of a deceased are a prior charge on the estate of a deceased before the estate passes to successors or beneficiaries. A beneficiary of a deceased who has received payment of his share of the succession prior to satisfaction of the creditors is liable to be sued in an action of repetition by creditors of the executory estate. The acceptance of a legacy does not infer a universal liability for the debts of the deceased but, rather, a liability to the extent of the value of the legacy or provision. Likewise, an heir of provision is liable to the deceased’s creditors, to the extent of the value of the property to which he or she succeeded, so far as they remain unsatisfied.

In this case Mr Machin died long before his estate was sequestrated. Accordingly, his share devolved automatically to his wife. According to long-established authority, his wife thereby incurred a personal liability to the unsatisfied creditors of the deceased to the extent of the value of her succession.

The subsequent sequestration superimposes upon those unsatisfied creditors a statutory process for the enforcement and collection of their debts for the benefit of the body of creditors as a whole and the ability of individual creditors to individually enforce the debtor’s obligations (and, by extension, of the liability of the heir of provision) is suspended. Instead, the creditors of the deceased are compelled to submit to the collective enforcement of their debts, whereby the trustee in sequestration enforces payment of the debtor’s obligations (including, by extension, the liability of the heir of provision) for the benefit of the body of creditors as a whole.

This analysis and outcome was noted by Lord Caplan in the case of Fleming’s Trustee v Fleming 2000 SC (at page 218) as being driven by pragmatism, avoiding “an unwelcome scramble” between the creditors themselves to claim directly from the heir of provision.

The effect of prescription

Given the passage of time between Mr Machin’s death and his sequestration a secondary issue of prescription arises. While this was not required to be dealt with in the case, Sheriff Reid helpfully provides a view.

He concludes that his preliminary view is that the survivor’s personal liability to creditors (or in this case to the trustee) is derived from the primary obligation of the deceased to his creditors. Death does not interrupt the operation of the prescriptive period.

Sheriff Reid pointed out that a debt subsisting at the date of death may nevertheless prescribe during the period of an executory. So, if some or all of the deceased’s debts (so far as they may have existed at the date of death) no longer subsist (due, for example, to discharge by payment, compromise, prescription or otherwise) then the survivor’s personal liability to the creditors may, in theory, likewise be abated.


  • Insolvency

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