The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market

Pursuant to Article 1072-2 of the Civil Code of the Republic of Kazakhstan, an inheritance may be accepted within six months from the date the inheritance is opened. If the inheritance is opened on the date of the presumed death of a citizen or upon the citizen being declared deceased (paragraph 2 of Article 1042 of the Civil Code of the Republic of Kazakhstan), the inheritance may be accepted within six months from the date of the deceased’s death or, in the case of a person being declared deceased, from the date on which the court decision declaring the citizen deceased enters into legal force, unless the court decision specifies another date. If the right to inherit arises for other persons as a result of an heir renouncing the inheritance, another heir failing to accept the inheritance, or an heir being excluded from inheritance on the grounds established by Article 1045 of the Civil Code of the Republic of Kazakhstan, such persons may accept the inheritance within six months from the date on which their right to inherit arises. At the same time, the legislation provides for a procedure for restoring an expired deadline for accepting an inheritance. Pursuant to Article 1072-3 of the Civil Code of the Republic of Kazakhstan, upon an application by an heir who has missed the deadline established for accepting an inheritance (Article 1072-2 of the Civil Code of the Republic of Kazakhstan), the court may restore the deadline and recognize the heir as having accepted the inheritance if the heir missed the deadline for valid reasons, provided that the heir applies to the court within six months after the circumstances that caused the missed deadline have ceased to exist. When recognizing an heir as having accepted the inheritance, the court determines the shares of all heirs in the inherited property and, where necessary, measures to protect the rights of the new heir to receive the share of the inheritance due to them. Previously issued certificates of inheritance rights are declared invalid by the court. Thus, the legislation does not establish a specific deadline for settling the repayment of the debt of a deceased borrower. The timeframe for resolving this matter may depend on the acceptance of the inheritance, determination of the heirs, the existence of court disputes, and other circumstances related to the formalization of inheritance rights.

Creditors are entitled to bring claims against heirs after the heirs have accepted the inheritance. Accordingly, the legally significant circumstance is the acceptance of the inheritance and the formalization of inheritance rights. At the same time, the law does not prohibit third parties from making payments toward the repayment of the borrower’s outstanding debt.

If an insured event specified in the insurance agreement occurs, the insurance company makes an insurance payment in accordance with the procedure and on the terms provided for in the insurance agreement. The existence of an outstanding debt after the insurance payment does not, in itself, create an obligation for the heirs to repay the debt in full. The extent of the heirs’ liability is determined taking into account the requirements of Article 1081 of the Civil Code of the Republic of Kazakhstan and is limited to the value of the inheritance accepted by them.

Pursuant to Article 287 of the Civil Code of the Republic of Kazakhstan, an obligation involving multiple parties, under which each creditor has the right to demand, and each debtor is obligated to perform, the obligation in full, is recognized as a joint and several obligation. In the case of joint and several liability of debtors, the creditor has the right to demand performance from all debtors or from any one of them individually, either in full or in part. A creditor who has not received full satisfaction from one of the joint and several debtors has the right to demand the outstanding amount from the other joint and several debtors. Joint and several debtors remain liable until the obligation has been fully discharged. Accordingly, where a loan agreement is entered into with multiple borrowers, the obligations of the remaining borrowers continue to exist if one of them dies. The bank is entitled to demand performance of the obligations from the co-borrowers in accordance with the terms of the loan agreement. Pursuant to Article 330 of the Civil Code of the Republic of Kazakhstan, under a suretyship, the surety undertakes to the creditor of another person (the debtor) to be liable for the performance of that person’s obligation, in whole or in part, on a subsidiary basis. The surety is liable to the creditor within the amount specified in the suretyship, unless otherwise provided by the terms of the suretyship. Before bringing a claim against a surety bearing subsidiary liability, the creditor must take reasonable measures to satisfy the claim against the debtor, including, in particular, by setting off a counterclaim and enforcing the debtor’s property in accordance with the established procedure. Accordingly, where a suretyship agreement has been entered into to secure the performance of the borrower’s obligations, the bank may bring a claim against the surety to the extent provided for by the suretyship agreement. The existence of heirs does not preclude the bank from bringing such a claim against the surety. In turn, where there are heirs, the surety has the right to seek performance of the deceased’s obligations from them to the extent that the surety has performed the debtor’s obligation to the creditor, pursuant to Article 334 of the Civil Code of the Republic of Kazakhstan.

Questions concerning the repayment of outstanding loan debt by the heirs of a deceased borrower may be resolved either voluntarily or through court proceedings. If there are no heirs, banks are entitled to enforce their claims against the collateral if the loan was secured by collateral. If there are no heirs and no estate assets comprising the inheritance, the creditor’s claims cannot be enforced through succession, since there are no persons or assets to which the rights and obligations of the deceased borrower could pass.

Pursuant to paragraph 1 of Article 1040 of the Civil Code of the Republic of Kazakhstan, the estate includes property belonging to the deceased, as well as rights and obligations whose existence is not terminated by the deceased’s death. The estate may also include rights necessary for formalizing the deceased’s property rights that were not formalized during the deceased’s lifetime, including the right to register such rights. At the same time, paragraph 2 of Article 1040 of the Civil Code of the Republic of Kazakhstan establishes an exhaustive list of rights and obligations that are inseparably connected with the personality of the deceased. This list does not include the deceased’s credit obligations. Accordingly, obligations to repay loans are inherited under the general rule. Pursuant to Article 1081 of the Civil Code of the Republic of Kazakhstan, creditors of the deceased are entitled to assert claims arising from the deceased’s obligations against the executor of the will (trust manager of the estate) or against the heirs, who are jointly and severally liable up to the value of the property transferred to each heir. If heirs who have accepted the inheritance evade registration of the property comprising the estate or the rights thereto, the creditors of the deceased are entitled to demand compulsory registration. Thus, the deceased’s obligations pass to the heirs only up to the value of the inherited property that they have accepted. If there is no inheritance or the inheritance has not been accepted, the heirs of the deceased have no legal grounds for paying the deceased’s debts.