Short answer

You can sometimes sell a deceased parent’s house while probate is open in Hawaii, even if there is a mortgage on the property. Whether you can sell and how the sale proceeds are handled depends on (1) whether the property is part of the probate estate, (2) whether the personal representative (executor/administrator) has authority to sell, (3) the mortgage lender’s rights, and (4) whether the estate has enough assets to pay the mortgage and other debts. Often the sale requires either lender cooperation or court authorization.

Detailed answer — how this works under Hawaii law

Below is a practical, step-by-step explanation of how a sale typically proceeds in Hawaii when a home with a mortgage is involved during probate.

1) Confirm whether the house is in probate

Not all property goes through probate. Property that passed automatically (for example, to a surviving joint tenant, a named beneficiary on a transfer-on-death deed, or by trust) usually does not become part of the probate estate. If the house did pass outside probate, the named survivor (or trustee) controls the house and the mortgage remains a lien on the property. If the home is part of the probate estate, the personal representative controls it subject to the probate rules and court supervision. For Hawaii probate law, see the Hawaii Revised Statutes (probate provisions) at the Legislature site: Hawaii Revised Statutes (search current chapters) and the probate chapter listings on the State site (see Chapter 560 and related provisions).

2) Who can sell the house during probate?

Normally the personal representative (executor or administrator) has authority to manage estate property. The will may give express power to sell real estate. If the will doesn’t, or if there is no will, the personal representative generally needs either specific legal authority under Hawaii probate law or a court order authorizing the sale. If the estate is insolvent or if creditors contest the sale, the probate court may require notice and a hearing before permitting a sale.

3) The mortgage lender’s lien and practical effects

A mortgage is a lien on the property. That lien does not disappear because the owner died. When you sell, the mortgage must be addressed at closing. Common outcomes:

Full payoff from sale proceeds. The sale proceeds pay off the mortgage at closing, and the lender releases its lien so the buyer takes a clear title.
Buyer assumes the mortgage (rare). A buyer may agree to assume the mortgage, but many lenders must approve the assumption. Lender approval is common only with assumable loans and qualified buyers.
Short sale or negotiated payoff. If the mortgage balance exceeds the expected sale price, you may negotiate a short sale with the lender (lender accepts less than full balance). Lenders typically require documentation that the seller is authorized (personal representative) and that the estate cannot pay the deficiency.
Mortgage survives sale if not paid. If the lien is not cleared, the buyer will not receive free-and-clear title and most title companies will not insure such a title; therefore, a lender or court-approved plan is usually necessary.

4) When do you need court approval?

If the personal representative’s statutory powers do not clearly include selling real property, or if the will does not authorize sale, court approval (an order confirming or authorizing sale) is commonly required. Court approval is also often needed when the sale is outside ordinary terms (sale to an insider, sale for less than market value, rehab-sale, or if creditors object).

5) What if the estate cannot pay the mortgage?

If the estate lacks funds to pay ongoing mortgage payments, taxes, insurance, and repairs, the personal representative has several options:

Sell the house quickly and pay the lender at closing.
Negotiate with the lender for a forbearance, short sale, or deed-in-lieu of foreclosure.
If the estate is insolvent, the personal representative must follow probate rules for paying creditors in priority order. If mortgage lender is a secured creditor, it has a priority interest in the property and may initiate foreclosure if payments stop.

6) Practical checklist for selling during probate in Hawaii

Determine whether the property passed outside probate (joint tenancy, TOD deed, trust) or is in the estate.
Confirm who is the personal representative and whether the will grants sale authority.
Gather the mortgage payoff statement/loan number and contact the lender to disclose the borrower’s death and discuss options (payoff, assumption, short sale, deed-in-lieu).
Talk to the probate court clerk or your probate attorney about whether court approval is required to market and sell the property.
Obtain a title search and speak with a title company about clearing liens at closing.
If needed, file a petition in probate court for authority to sell and request expedited relief if mortgage payments are at risk.
Disclose the mortgage and any known issues to potential buyers; make sure the contract addresses payoff and closing conditions (for example, “subject to lender payoff”).

7) Special situations

Joint tenancy or TOD deed: If the decedent held title with right of survivorship, the property may pass automatically and the surviving co-owner controls the sale (but the mortgage remains a lien until paid). Trust property: If the house is in a revocable trust, the successor trustee handles the sale per the trust terms, subject to the mortgage lien. Community property or family transfers: Handle accordingly and confirm with an attorney.

8) When a lender will require more than the personal representative’s word

Lenders commonly ask for proof of authority: the letters testamentary or letters of administration issued by the probate court. They may also require a certified copy of the death certificate and a payoff demand. If the personal representative lacks those documents, the lender may resist or delay payoff and closing.

Quick examples (hypothetical)

Example A — Quick sale with payoff: The estate’s house is listed, sells above the mortgage balance, the title company pays off the mortgage at closing, and the remainder goes to the estate to distribute to beneficiaries after paying expenses.

Example B — Short sale: The mortgage is $400,000, the likely sale price is $350,000, and the lender agrees to accept $350,000 and release the lien. The personal representative must show financial facts to the lender and usually needs court authorization and a title company to handle the closing.

Relevant Hawaii law references

Probate in Hawaii is governed by the Hawaii Revised Statutes. For general probate provisions and personal representative powers, consult the Hawaii Revised Statutes and the Hawaii State Legislature website. You can search the current statutes here: https://www.capitol.hawaii.gov/hrscurrent/. For practical court procedures and forms, check the Hawaii State Judiciary probate pages (Hawaii State Judiciary website) or contact the probate clerk in the circuit where the decedent lived.

When to consult a lawyer

Talk to a probate attorney if any of the following apply: the lender refuses payoff or demands extra documents; the sale price may not cover the mortgage; the estate appears insolvent; beneficiaries disagree; the will doesn’t clearly authorize sale; or you need a quick court order to prevent foreclosure. A lawyer can help petition the probate court, negotiate with lenders, and protect the personal representative from personal liability.

Disclaimer

This article explains general principles about selling estate property under Hawaii law. It is educational only and does not constitute legal advice. Laws change and outcomes depend on specific facts. Consult a licensed Hawaii attorney for advice about your exact situation.

Helpful Hints

Get the lender’s payoff statement early — it clarifies the numbers you need for pricing and negotiations.
Obtain letters testamentary/administration from the probate court as soon as possible; lenders and title companies will ask for them.
Ask the title company what is needed to clear liens so you can structure the sales contract accordingly.
If mortgage payments are overdue, move quickly to market the property or seek a court order to sell to avoid foreclosure risk.
Offer full disclosure to buyers about the mortgage and the probate status to avoid last-minute contract failures.
If the estate is insolvent, get legal advice before selling — creditor priority rules will determine how proceeds are used.
Consider short sale only with documented lender approval in writing; lenders often require proof that the seller is the personal representative and that the estate cannot pay the shortfall.