Detailed Answer

Short answer: Yes, you can often sell a decedent’s house during probate in Arizona even if there is a mortgage on it—but the mortgage does not disappear and certain steps and approvals are usually required so the sale can close and creditors (including the mortgage lender) are paid from the estate.

How it works under Arizona law (plain-language overview):

Authority to act: The person who can sell estate real property is the personal representative (sometimes called executor or administrator) once appointed by the probate court or as authorized in the will. Arizona law governs probate and the powers of personal representatives. See Arizona Revised Statutes, Title 14 (Probate): https://www.azleg.gov/arsDetail/?title=14.
Mortgage remains a lien: A mortgage stays attached to the property even after the owner dies. A sale usually must either pay off the mortgage at closing or be approved by the mortgage holder (for example, in a short sale where the sales price is less than the loan payoff).
Sale proceeds used to pay debts: The personal representative must use estate funds, typically sale proceeds, to pay valid creditors in the proper order under Arizona probate law. This often means paying the mortgage lender from the sale proceeds before distributing any remainder to beneficiaries.
Court approval and authority in the will: If the will expressly grants the personal representative authority to sell real property, the representative may be able to sell without a separate court order. If not, the representative will typically seek court approval or proceed under the court’s supervision. See Title 14 referenced above and local probate rules for court procedures.
Insufficient equity and lender cooperation: If the mortgage balance is higher than the likely sale price, the lender must agree to accept less (a short sale) or risk foreclosure. The lender’s cooperation is required for a short sale; the personal representative should contact the lender early to get a payoff statement and to discuss options.
Non-probate transfers: Before pursuing probate sale processes, check whether the house passed outside probate (for example, joint tenancy, community property with right of survivorship, or transfer-on-death deed). If so, the property may not be an asset of the probate estate and the co-owner or designated transferee will handle the mortgage and sale.

Step-by-step practical guide (typical timeline)

Confirm whether probate is required. If the property passed outside probate, you may not need court permission. If probate is required, petition for appointment of a personal representative.
Get appointed. Once the personal representative is appointed, they have authority to manage estate assets subject to the will and probate law. See Title 14: https://www.azleg.gov/arsDetail/?title=14.
Identify liabilities and get a mortgage payoff letter. Contact the lender to obtain a current payoff amount, any required documentation, and instructions for handling the loan after the borrower’s death.
Value the house. Obtain a market appraisal or broker pricing opinion so the representative and the lender know expected proceeds.
Decide sale strategy. If equity exists, list property for sale and plan to use closing proceeds to pay the mortgage. If there is negative equity, talk to the lender about a short sale or deed-in-lieu of foreclosure.
Obtain court approval if required. If the will doesn’t expressly allow sale or the representative needs to sell quickly, the court can authorize sale of estate real property. Consult local court rules; Arizona courts publish probate info here: https://www.azcourts.gov/Probate.
Close the sale. At closing the mortgage payoff is typically paid from sale proceeds, subordinate liens (if any) are handled, and net proceeds are distributed under Arizona probate priorities.

Hypothetical example

Mother owned a home with a $200,000 mortgage and died leaving a will naming her adult child as personal representative. An appraisal shows market value of $275,000. The personal representative is appointed by the probate court, lists the house, and accepts an offer for $270,000. At closing the lender receives a payoff for the mortgage balance and any remaining estate funds go to pay other creditors, taxes, and then beneficiaries.

If instead the appraisal value had been $180,000, the lender would need to agree to accept less than the mortgage balance (short sale) or the estate would need other funds to satisfy the mortgage—otherwise the property could be foreclosed upon.

Key Arizona law and resources

Arizona Revised Statutes, Title 14 (Probate): https://www.azleg.gov/arsDetail/?title=14
Arizona Revised Statutes, Title 33 (Property, including liens and recording rules): https://www.azleg.gov/arsDetail/?title=33
Arizona Judicial Branch — probate information and court resources: https://www.azcourts.gov/Probate

When you need a lawyer

Talk to a probate or real estate attorney if the situation involves any of these complications:

The mortgage exceeds the property’s market value (short-sale or lender negotiations needed).
There are multiple liens, disputes among heirs or beneficiaries, or potential creditor claims.
The will does not clearly authorize the sale, and court approval is contested or complicated.
There are priority issues (spousal or homestead rights) that may affect distribution.

An attorney can help verify the personal representative’s authority, prepare and file necessary court documents, negotiate with the lender, and ensure the sale and distributions comply with Arizona probate law.

Disclaimer

This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Arizona attorney.

Helpful Hints

Immediately contact the mortgage lender to get a written payoff statement and ask about options after the borrower’s death.
Confirm whether the property passed outside probate (joint tenancy, survivorship deed, or transfer-on-death) before starting probate sale steps.
Get a quick market valuation so you know whether equity exists and whether a short sale might be needed.
Keep detailed records of offers, communications with lenders, repair estimates, and court filings—these documents protect the personal representative and beneficiaries.
If short sale is a possibility, be prepared to provide documentation to the lender showing estate administration and authority to sell.
When in doubt about court approval requirements, ask the probate clerk or an attorney—procedural errors can delay closings.