Can a Home Be Sold During Probate When a Mortgage Remains? (Maine)

Short answer: Yes — but only if the estate’s personal representative (executor or administrator) has authority to sell and the sale satisfies the mortgage lender’s payoff. The probate process, lender requirements, and the estate’s finances determine how and when the sale can happen.

Detailed answer — how selling a mortgaged house during probate works in Maine

This section explains, step by step, what typically must happen to sell a parent’s house in Maine while the estate goes through probate. It assumes the property was owned by your mother in her name alone and that probate is required.

1. The mortgage survives the owner’s death

A mortgage is a secured debt attached to the property, not to the person. When the homeowner dies, the mortgage does not disappear. The lender retains its security interest in the house and the loan balance must be paid from estate funds, from sale proceeds, or by whoever agrees to assume or refinance the loan.

2. Who can sell the house?

Only the personal representative who is appointed by the probate court can market and transfer estate real property. If the will names an executor and the court has issued Letters Testamentary (or if there is no will, the court has appointed an administrator and issued Letters of Administration), that person has authority to act for the estate.

Maine’s probate rules govern the duties and powers of personal representatives. See Maine Probate Code (Title 18-B) for the court’s role and the representative’s authority: https://legislature.maine.gov/statutes/18-B/

3. Do you need court approval to sell?

It depends. If the personal representative has broad authority under the will or under Maine probate law and the estate is being administered in the usual way, the representative can often sell property as part of estate administration without separate permission. However, if the will limits the representative’s power, if there is a dispute among heirs, or if the probate is supervised or restricted by the court, the representative may need to ask the court to authorize the sale.

4. How the mortgage affects the sale at closing

At closing, the mortgage is normally paid off from the sale proceeds. The closing agent or attorney orders a payoff statement from the lender showing the precise payoff amount and any prepayment penalties. The lender’s lien is released once the loan is paid off and the deed is recorded in the buyer’s name.

5. What if the mortgage balance exceeds the sale price (short sale)?

If the house will sell for less than the mortgage balance, the personal representative must contact the lender. The lender can agree to a short sale (accept less than full payoff) or refuse. If the lender refuses, the estate must make up the deficiency (if estate funds exist) or the lender may pursue foreclosure to protect its interest. Negotiating with the lender early is essential.

6. What about missed mortgage payments and foreclosure?

If mortgage payments stop after the owner’s death, the lender may start collection or foreclosure. The personal representative should communicate with the lender immediately to explain the situation, obtain a payoff statement, and ask about temporary options while the estate arranges a sale. In many cases, lenders will work with estates to avoid foreclosure while probate proceeds.

7. Practical closing steps

• Locate the will (if any) and open probate with the local Maine probate court to get Letters for the personal representative.
• Obtain a title search to identify all liens, taxes, or judgments against the property.
• Notify the mortgage lender and request a written payoff statement (payoff amount and expiration date).
• List the property with a real estate agent experienced with probate sales or sell it through an estate sale process.
• Handle offers and negotiate terms, keeping the payoff and any creditor claims in mind.
• At closing, use proceeds to pay the mortgage, closing costs, commissions, probate expenses, and creditor claims in the order required by Maine law.
• Record the deed and file the final probate accounting with the court as required.

When issues commonly arise

Common complications include:

• No appointed representative yet: You must open probate before selling.
• Mortgage balance greater than market value: May require lender approval for a short sale or the estate to bring funds to closing.
• Disputes among heirs: Court approval may be needed if heirs object to the sale.
• Title defects or additional liens: These must be cleared before a clean closing.

Key Maine law references

• Maine’s Probate Code (Title 18‑B) governs the appointment and powers of personal representatives and the probate process. For the statutory framework, see: https://legislature.maine.gov/statutes/18-B/

• Lender remedies and foreclosure procedures appear elsewhere in Maine law. If foreclosure or creditor claims are a risk, consult the appropriate sections of Maine law or an attorney.

Helpful Hints

• Open probate promptly so a personal representative can act. Delays make lenders less flexible.
• Contact the mortgage lender immediately and request a payoff statement in writing.
• Get a title search early to find liens or other claims that could block a sale.
• Consider hiring a real estate agent who has experience with probate sales in Maine.
• If the sale will be a short sale, start negotiating with the lender early and get any agreement in writing.
• Keep careful records of all communications, offers, payoff statements, and court filings.
• Talk with a probate or real estate attorney if there are disputes among heirs, complicated debts, or potential tax concerns.
• Remember closing costs: commissions, attorney/closing agent fees, probate costs, and taxes can reduce the net available to pay debts.

When to consult an attorney

Speak with a Maine probate or real estate attorney if any of the following apply:

• There is disagreement among heirs or beneficiaries.
• The estate cannot cover the mortgage balance and a short sale or negotiated payoff is necessary.
• There are title defects, unpaid taxes, or multiple creditors claiming interest in the property.
• You are unsure whether the personal representative’s powers are adequate to sell without court permission.

Disclaimer: This article explains general principles of Maine probate and real estate practice. It is educational only and not legal advice. For advice specific to your situation, consult a licensed Maine attorney.