Detailed Answer — How this works under New Mexico law

This section explains the typical legal path, the practical steps, and the issues you must resolve to sell a house that still carries a mortgage while the estate is in probate in New Mexico. This information describes how probate administration and mortgage obligations commonly interact. It does not replace legal advice specific to your situation.

Who can sell the property?

Only the person who has legal authority over the estate can sell estate property. In New Mexico that is generally the personal representative (sometimes called executor or administrator) appointed by the probate court. If no one has been appointed yet, a sale usually cannot proceed other than under very limited procedures (for example, emergency relief in rare situations).

The probate code gives the personal representative powers to manage and, when authorized, sell estate property. For more information on the probate process and powers of a personal representative see New Mexico probate resources: https://www.nmlegis.gov/Legislation/Statutes/Chapter/45 and the New Mexico Courts probate information: https://www.nmcourts.gov/probate/.

Do you need court approval?

Often yes. A personal representative frequently must either have authority in the will or obtain the court’s approval to sell real property. The probate court may require a formal petition and a court order authorizing the sale, and it may require notice to heirs and creditors before the sale can close. In routine administrations the court grants authority by appointment papers or a later order; in contested situations the court may hold a hearing.

What happens to the mortgage when the property is sold?

A mortgage remains a lien on the property until it is paid or released. A buyer’s lender (or a cash buyer’s title company) will want the mortgage paid off at closing or an approved mortgage assumption in place, and the escrow/title company will generally require a payoff demand from the mortgage holder before issuing clear title. Practically, one of these will happen at sale:

• Payoff at closing: Sale proceeds pay the mortgage in full and any remaining funds flow into the estate to pay other debts or distribute to heirs.
• Assumption: A buyer agrees to assume the mortgage and the lender consents, if the mortgage terms allow assumption. Lender consent is often required and not always given.
• Short sale: If the mortgage balance exceeds fair market value, the personal representative can negotiate a short sale with the lender. The lender must approve the short sale, and approval may take time and require documentation from the estate.

Creditors, priorities, and distribution of proceeds

Mortgage debt is a secured creditor claim against the house. When property is sold in probate, secured claims tied to the property (like the mortgage) are typically paid from the sale proceeds before distributions to heirs. The personal representative must follow New Mexico probate procedures to give notice to creditors, allow claims, and pay debts and expenses in the correct priority. See guidance on New Mexico probate statutes here: https://www.nmlegis.gov/Legislation/Statutes/Chapter/45.

Common scenarios you will encounter

• If you are the appointed personal representative and the mortgage lender will accept payoff at closing, you can petition the court (if required) for authority to sell, list the home, and close — using proceeds to clear the mortgage and pay estate expenses.
• If the estate is underwater (mortgage balance > home value), you will likely need the lender’s approval for a short sale or deed-in-lieu. The lender may require court confirmation of the sale or other documentation from the estate.
• If a surviving spouse or heirs have homestead or other statutory protections, these rights can affect the sale. You must identify exempt property claims and resolve them before or as part of the probate sale process.
• If a will specifically directs sale or the will grants the personal representative sale authority, the court often approves the sale more quickly, but notice and creditor procedures still apply.

Practical steps to sell during probate in New Mexico

1. Confirm who is the personal representative. If one is not appointed, file a petition to be appointed or ask the appointed person to handle the sale.
2. Contact the mortgage lender to request a current payoff statement and to discuss whether the loan can be assumed or if a short sale or deed-in-lieu is possible.
3. Check the will (if any) for sale authorization; if the will does not clearly grant authority, petition the probate court for an order authorizing sale and for approval of the sale terms.
4. Provide required notices to heirs and creditors and comply with any waiting periods the court imposes.
5. Work with a real estate agent experienced in probate sales and a title company familiar with probate deeds and payoffs. The title company will usually insist on a court order or a certified copy of the personal representative’s appointment and on a mortgage payoff at closing.
6. Close the sale through escrow. The title/escrow company will pay off the mortgage from proceeds, apply estate costs, and deliver any remainder to the estate for distribution under the probate court’s directions.

Timing and delays

Mortgages, lender approvals, court scheduling, and creditor notices can all delay a sale. Short sales and lender negotiations add extra time. Plan for several weeks to months, depending on complexity.

What if heirs disagree or there’s no personal representative?

If heirs disagree about selling, the personal representative or an interested party may ask the court to resolve disputes. If no representative exists, heirs can pursue a formal appointment or, in narrow cases, seek a summary or small estate procedure if eligible under New Mexico law.

Where to find the law

New Mexico’s statutes governing decedents’ estates and probate procedures are located in Chapter 45 of the New Mexico Statutes. The New Mexico Legislature provides access to statutory text here: https://www.nmlegis.gov/Legislation/Statutes/Chapter/45. For mortgage lien and foreclosure law, see New Mexico statutes related to mortgages (Chapter 39): https://www.nmlegis.gov/Legislation/Statutes/Chapter/39. For court procedures and probate forms, consult the New Mexico Courts probate pages: https://www.nmcourts.gov/probate/.

Important: Statutory details, deadlines, and local practice vary. Always confirm exact procedural rules with the probate court where the estate is filed and consider consulting a local probate attorney.

Helpful Hints

• Do not sign documents transferring title unless you are the appointed personal representative or a court order allows you to act.
• Contact the mortgage servicer early to get a payoff statement and understand whether the loan can be assumed or must be paid at closing.
• If the house is worth less than the mortgage, prepare for a short sale process; get lender preapproval for a short sale before marketing the home as such.
• Work with a title company that knows probate sales — they will list required documents and help ensure the mortgage lien is cleared at closing.
• Keep detailed records of all estate communications, mortgage payoffs, and court filings — the probate court will expect transparency and accounting.
• If you expect disputes among heirs, seek a court order approving the sale; an order reduces the risk the sale will be undone later.
• Ask whether exemptions (such as homestead) or surviving-spouse protections apply; they can change who must consent to a sale or what the estate must do before selling.
• Consider short-term solutions (e.g., maintaining insurance and mortgage payments) while the probate process proceeds to preserve property value and avoid foreclosure.