California: Selling a Deceased Parent’s House During Probate When a Mortgage Remains

Detailed Answer

If your mother died owning a house in California that still has a mortgage, the estate can usually sell the house during probate — but how you sell it, who must approve the sale, and how the mortgage is handled depend on several things under California law.

Key concepts (plain language)

• Personal representative: The person appointed by the court (executor or administrator) manages the estate and handles sale of estate assets.
• Independent administration (IAEA): If the court grants independent administration powers, the personal representative has broader authority to sell real property without full prior court confirmation.
• Mortgage lien: The lender’s mortgage remains attached to the property until it is paid off or otherwise satisfied. A buyer will usually expect the mortgage to be paid from sale proceeds or to approve an assumption.
• Court confirmation: If the estate does not have independent administration powers, many sales require a court petition and court confirmation before they are final.

Typical steps and legal rules

1. Appointment. First, someone must be appointed personal representative by the probate court if the property is in your mother’s name alone. The representative obtains letters testamentary/letters of administration that prove authority to act.
2. Check whether the estate has independent administration authority. California law provides for an Independent Administration of Estates Act (IAEA) option; when the court grants IAEA powers, the personal representative can, in many cases, sell real estate without a prior hearing and confirmation. See the IAEA provisions in the California Probate Code for details: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=10400.&lawCode=PROBATE
3. Identify liens and debts. The representative must find out the mortgage balance and any other liens (taxes, judgments, mechanics’ liens). The mortgage stays attached to the property until it’s paid off or the lender agrees otherwise.
4. Get court permission if required. If the estate lacks independent-administration authority, the representative will need to petition the court for authority to sell the real property and then the sale normally requires court confirmation. Even with IAEA, certain sales (for example to related parties or for less than fair market value) may trigger court involvement.
5. Sell and pay lien from proceeds. In most situations the mortgage is paid out of the sale proceeds at closing. The buyer’s lender will typically insist on payoff of the existing mortgage (a title company will require a clear title or proper lien release). If the estate cannot fully pay off the mortgage, options include arranging a short sale with the lender’s approval or allowing a buyer to assume the mortgage if the lender permits.
6. Priority of claims. Mortgage liens generally have priority and are paid before distribution of remainder to heirs or beneficiaries. The personal representative must follow creditor-claim procedures set by the Probate Code to protect the estate and the representative from liability.

Common scenarios and outcomes

Here are a few common fact patterns and how they often play out:

• Estate has enough cash or buyer pays full price: The mortgage is paid off at closing and net proceeds are distributed according to the will or California intestacy rules.
• Property is “underwater” (mortgage > value): The estate may ask the lender to accept a short sale. The lender must approve and may require a formal process; otherwise the lender might pursue a deficiency (unless law prevents it) or pursue foreclosure.
• No IAEA powers or contested sale: The personal representative files a petition and notices for sale under the Probate Code; a hearing and confirmation by the court may be required, which can delay closing.
• Joint tenancy or trust ownership: If the house passed outside probate (for example, joint tenancy with right of survivorship or held in a living trust), the estate may not need to sell through probate at all. You should verify title and beneficiary designations.

Statutes and resources

For the general probate rules and the independent administration provisions, consult the California Probate Code and the California Courts information pages. Useful starting points:

• California Probate Code (overview): https://leginfo.legislature.ca.gov/faces/codes.xhtml?lawCode=PROBATE
• Independent Administration of Estates Act (IAEA): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=10400.&lawCode=PROBATE
• California Courts — Probate/self-help resources: https://www.courts.ca.gov/selfhelp-probate.htm

Practical things to expect

Timeframes: Probate sales often take longer than ordinary real-estate sales because of appointment, notices, and possible confirmation hearings (unless IAEA applies). Expect weeks to months.

Title and lender requirements: Buyers and lenders want clear title. The title company and lender will insist on payoff of the mortgage or a recorded assumption/release arrangement acceptable to them. The personal representative should obtain a written payoff quote from the lender early in the process.

Helpful Hints

• Get appointed quickly. If you want the house sold promptly, ask the court to appoint a personal representative as soon as possible so that letters can be issued.
• Talk to the lender early. Notify the mortgage lender that the borrower died, ask for the exact payoff amount and any required forms for assumption or short sale.
• Check title and ownership. Confirm whether the house is solely in your mother’s name or passed outside probate (joint tenancy, trust, beneficiary deed). If it passed outside probate, you may not need probate to sell.
• Consider independent administration. If possible, seek independent administration powers (IAEA) in the probate petition so the representative can sell without a confirmation hearing in many cases. Ask your probate attorney about when IAEA is appropriate.
• Get a market valuation. Have a realtor or appraiser value the property before listing so you know whether the sale will cover the mortgage and other debts.
• Expect creditor procedures. The representative must follow statutory creditor notice periods before final distribution; plan sales and distributions with those timelines in mind.
• Short sale options. If the mortgage exceeds market value, a short sale can work but requires lender approval and may take extra time and documentation.
• Use professionals. Work with a probate attorney and an experienced title company or real-estate attorney to ensure the sale follows court rules and mortgage payoff procedures.

Disclaimer: This information is general and educational and not legal advice. It explains common California probate practice and points you to resources, but it does not create an attorney–client relationship. For advice about your specific situation, consult a licensed California probate or real-estate attorney.