Detailed Answer — How to take over a deceased parent’s mortgage in Arizona
When a homeowner dies in Arizona, two separate legal issues determine what happens to the house and the mortgage: (1) how title to the house passes, and (2) what the mortgage lender can require. Below is a clear, step‑by‑step explanation of what typically must happen and what options you may have.
1. Figure out how title passes
Start by locating the deed and any beneficiary designation. Common ways title passes at death:
- Joint tenancy or community property with right of survivorship — the surviving joint owner(s) automatically take title when the co‑owner dies. In that case, you become the owner by operation of law; you will need to record paperwork (death certificate; affidavit or other recorder requirements) to update county records.
- Transfer‑on‑Death (TOD) deed / beneficiary deed — Arizona allows beneficiary deeds for real property so the named beneficiary receives title at the owner’s death without probate. If a valid TOD/beneficiary deed exists, record the death certificate and required affidavit to effect the transfer.
- Will or intestacy (no deed or TOD) — if title does not pass automatically, the property goes through probate. The personal representative (executor/administrator) appointed by the probate court handles distribution and dealing with creditors, including the mortgage.
For summaries of Arizona estate and property law, see Arizona Revised Statutes, Title 14 (Trusts, Estates and Protective Proceedings) and Title 33 (Property). You can review those at the Arizona Legislature website for more detail: A.R.S. Title 14 (Trusts & Estates) and A.R.S. Title 33 (Property).
2. What happens to the mortgage lien
Mortgages remain attached to the property after the borrower’s death. The bank can require that the loan be paid, but federal law limits the lender’s ability to call the loan due in some transfers. Key points:
- If you receive title automatically (joint owner, TOD deed, survivorship), the mortgage stays on the property. Some lenders will allow you to remain in the loan if you continue making payments, but they may ask you to formally “assume” the mortgage or refinance. Check the loan documents and talk to the lender.
- If the property passes through probate to you, the estate initially remains responsible for debts. The personal representative must manage the asset and creditors. If you want to keep the home, the lender may require an assumption or refinance in your name.
- The federal Garn‑St. Germain Depository Institutions Act restricts when a lender can enforce a due‑on‑sale clause. For example, certain transfers on the death of a borrower to a relative may not trigger acceleration. See 12 U.S.C. §1701j‑3 for the federal rules: 12 U.S.C. §1701j‑3 (Garn‑St. Germain). This federal protection can apply even if the mortgage contains a due‑on‑sale clause.
3. Practical steps to take
- Obtain multiple certified copies of the death certificate. You will need them for the county recorder, lender, and other agencies.
- Locate the deed, mortgage note, and loan documents. The county recorder’s office can provide a copy of the deed. Review the mortgage for assumption clauses and note whether the loan is FHA, VA, USDA, conventional, or private.
- Contact the lender promptly. Notify the mortgage servicer that the borrower died. Ask for their procedures, whether they will allow assumption, what documentation they need, and whether they will accelerate the loan.
- Confirm how title passed. If title passed by survivorship or TOD deed, record the necessary affidavit and death certificate with the county recorder to clear title to your name.
- If probate is required, open a probate case or consult the personal representative. The probate court process will determine who has authority to act regarding the property and its mortgage. Arizona probate procedures are under Title 14 of the Arizona Revised Statutes: A.R.S. Title 14.
- Decide how to handle the loan: assume, refinance, or sell. If the lender allows assumption and you qualify, you can assume the mortgage and become personally liable. If not, you may need to refinance in your name or sell the property to pay off the loan.
- Protect the property from default while you sort things out. Continue making payments if possible, or arrange for the estate or a responsible party to do so. If payments stop, the lender may start foreclosure under state law.
4. Special loan types and rules
- VA loans: VA loans are often assumable by qualified applicants, but the VA and lender must approve the assumption.
- FHA or USDA loans: These have specific servicer rules about assumption and death. Ask the servicer for precise guidance.
- Private or seller‑financed loans: Terms vary by contract. Review the mortgage and promissory note for transfer rules.
5. When to get legal help
Consider consulting an Arizona probate or real‑estate attorney if any of the following apply:
- The title does not pass automatically and probate seems necessary.
- The lender is threatening to accelerate the loan or foreclose.
- Multiple heirs dispute who will take the home.
- You need to negotiate an assumption, refinance or sale under short timelines.
Arizona courts and local legal aid organizations can provide general probate information. For self‑help resources, the Arizona Judicial Branch publishes guidance on probate and estate matters.
Bottom line
If you became owner immediately by survivorship or a beneficiary deed, record the death certificate and notify the lender. The mortgage stays attached to the house; you may be able to keep paying without formally assuming, but the lender may require assumption or refinancing. If the property must pass through probate, the probate process will control how the mortgage is handled and whether you can keep the home. Contact the lender quickly and consult a probate/real‑estate attorney if the situation is complex or a lender demands immediate payoff.
Relevant statutes and resources (for more detail):
- Arizona Revised Statutes, Title 14 (Trusts, Estates and Protective Proceedings): https://www.azleg.gov/arsDetail/?title=14
- Arizona Revised Statutes, Title 33 (Property): https://www.azleg.gov/arsDetail/?title=33
- Federal law limiting due‑on‑sale enforcement (Garn‑St. Germain): 12 U.S.C. §1701j‑3
Disclaimer: This article explains general Arizona law and common steps people take. It is for educational purposes only and is not legal advice. Consult a licensed Arizona attorney to get advice about your specific situation.
Helpful Hints
- Get at least 6 certified death certificates. Multiple agencies and the county recorder will want originals.
- Copy the deed, mortgage, and any estate planning documents (will, trust, beneficiary deed) before you do anything else.
- Call the mortgage servicer early; ask for their loss‑mitigation, assumption, or probate procedures and what documentation they need.
- If you plan to assume or refinance, check credit and income requirements now so you can act quickly.
- Keep paying the mortgage while you sort title. Avoid missed payments that could trigger foreclosure.
- If other heirs are involved, document communications in writing and get clear court directions if disputes arise.
- Ask about special protections if the loan is VA, FHA, or USDA—those loan types have unique rules.
- Use the county recorder’s office website to find recorded deeds and to learn what documents they require to record a transfer after death.