Detailed Answer
Short answer: Yes, a decedent’s house can often be sold during probate in Alaska, but the sale must follow probate rules and the mortgage remains an encumbrance unless it is paid off or the lender agrees to release or allow an assumption. The personal representative (executor or administrator) needs authority—either from the will or from the probate court—and must address the mortgage and creditor priorities before conveying clear title.
This is not legal advice. Consult a licensed Alaska attorney before you act.
Why the mortgage matters
A mortgage is a lien on the property. A sale does not automatically erase that lien. At closing, the mortgage lender will typically require payoff of the mortgage or written agreement that the buyer will assume the loan. If the estate sells the house and has cash, the personal representative can pay the mortgage from sale proceeds. If the estate lacks funds, options are limited until the probate court and the lender are involved.
Who can sell the property during probate?
In Alaska, a personal representative may sell estate real property when authorized by the decedent’s will or by the probate court under the state probate statutes. The specific statutes governing probate and the powers of personal representatives are in Alaska Statutes, Title 13 (Probate, Trusts, and Fiduciaries): https://www.akleg.gov/basis/statutes.asp#13. The Alaska Court System also provides probate procedure information: https://courts.alaska.gov/shc/probate.htm.
Common scenarios and what typically happens
- Estate has enough cash to pay the mortgage: The personal representative can arrange a sale, pay off the mortgage at closing, and distribute remaining proceeds per the will or Alaska intestacy rules.
- Estate lacks cash but house equity exceeds mortgage: The representative may seek court approval to sell the property and use sale proceeds to pay the mortgage and administration costs. The court may require notice to creditors and interested parties.
- Estate is insolvent (mortgage balance > home value): The lender has priority. The representative must work with the lender. Options include letting the lender foreclose, negotiating a short sale (lender approval required), or seeking court guidance.
- Buyer willing to assume mortgage: Many lenders will not allow assumption without underwriting and approval. If the lender consents, the buyer may take the property subject to the mortgage; otherwise, the mortgage must be paid off at closing.
Typical steps to sell during probate in Alaska
- Locate the will and determine whether it grants sale authority to the named personal representative.
- Open probate and have the court formally appoint the personal representative if not already appointed.
- Inventory assets and order a title search to identify mortgages, liens, or other encumbrances.
- Contact the mortgage lender early to obtain the current payoff amount and learn whether the lender will accept an assumption or a short sale.
- If required, petition the probate court for authorization to sell the property. The court may require notice to heirs and creditors and a confirmation hearing if the sale seeks to clear liens.
- Obtain an appraisal or broker opinion of value and list the property if selling on the open market.
- Close the sale: at closing the mortgage is typically paid from the sale proceeds so the buyer receives clear title, unless the buyer assumes the loan with lender approval.
- Distribute remaining proceeds according to the will or Alaska intestacy law, after paying allowed administration expenses and creditor claims.
Practical considerations
– Lenders may accelerate the mortgage if they learn of the owner’s death. Contact the lender promptly to avoid surprise demands.
– Alaska’s probate process includes notice periods for creditors and certain formal steps to protect buyer and lender expectations. See Alaska Statutes, Title 13 for probate rules: https://www.akleg.gov/basis/statutes.asp#13.
– If you plan a short sale, expect the lender to require documentation that selling for less is the estate’s best available option and to approve the buyer and sale terms.
– If heirs want to buy the house, they should be careful: buying while acting as a fiduciary or after distribution can raise conflict-of-interest and valuation issues; court oversight or independent appraisal can help.
Helpful Hints
- Confirm who is the court-appointed personal representative before discussing or signing offers.
- Contact the mortgage lender right away. Ask for payoff numbers, assumption policies, and whether the lender requires notice of death.
- Get a title search and a current payoff letter to identify liens and exact mortgage balances.
- If the will does not expressly authorize sale, get court approval before marketing the property.
- Consider an appraisal or broker’s opinion to set an appropriate asking price—this helps if the sale needs court confirmation.
- If the estate is insolvent, talk to the lender about short-sale options rather than assuming foreclosure will be automatic.
- Keep detailed records of all estate transactions and consult an Alaska probate attorney for court filings and confirmations.
- Do not sign documents that could bind the estate without court authority or legal advice.
Where to get official information and forms
– Alaska Statutes, Title 13 (Probate, Trusts, and Fiduciaries): https://www.akleg.gov/basis/statutes.asp#13
– Alaska Court System probate information and local court forms: https://courts.alaska.gov/shc/probate.htm
Because probate sales and mortgage priorities can be complex, consider discussing your situation with a licensed Alaska probate attorney before starting a sale.
Disclaimer: This article provides general information about Alaska probate and mortgages. It is not legal advice and does not create an attorney-client relationship. For advice specific to your situation, consult a licensed attorney in Alaska.