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How this works in plain language

When someone dies, their property becomes part of the estate. A personal representative (the person named in the will or appointed by the court) collects assets, pays debts (including mortgages), and distributes what remains to beneficiaries. If the house is part of the estate and there is a mortgage, the mortgage is a lien against the property. A buyer wants clear title, so the mortgage usually must be paid off at closing or the lender must agree to let the buyer assume the loan.

So, selling a mortgaged house during probate is common, but it requires steps: confirm the personal representative’s authority, notify interested parties, get any required court permission, get a mortgage payoff statement, and handle closing so the lender is paid and title is cleared.

Key legal background under Iowa law

Iowa law gives the personal representative specific duties and powers to manage estate property and to pay creditors before distributing assets to beneficiaries. For general rules about probate, see Iowa Code chapter 633 (Decedents’ Estates): Iowa Code (Iowa Legislature). The Iowa Courts also explain the probate process and the role of the personal representative: Iowa Judicial Branch — Probate.

Important points under that framework:

• The personal representative must identify and protect estate assets, which includes the house.
• Creditors (including the mortgage lender) have priority for payment from estate assets before beneficiaries receive distributions.
• If the will does not specifically give the representative authority to sell real property, the representative may need court approval or must follow statutory procedures before selling.

Typical steps to sell a mortgaged house during probate in Iowa

1. Confirm who has authority. Determine whether you are the personal representative (named in the will or appointed by the probate court). Only that person or someone the court authorizes can sell estate property.
2. Review the will and probate orders. The will may grant sale authority; otherwise ask the court to authorize a sale. If the representative already has letters testamentary or letters of administration, these documents will state the scope of authority.
3. Identify the mortgage and get a payoff statement. Contact the mortgage lender to confirm the outstanding balance, interest, and the required payoff procedure. The lender’s lien remains until paid off.
4. Decide how the mortgage will be handled. Typical options are: (a) the estate pays off the mortgage from estate funds at closing; (b) the buyer pays off the mortgage as part of closing; or (c) the buyer assumes the mortgage if the lender allows loan assumption. The lender’s cooperation may be required for assumption.
5. Get court approval if required. If state law, the will, or a buyer/title company requires a court order authorizing sale, the personal representative must petition the probate court and obtain an order. The court may require notice to heirs or creditors and may set terms (e.g., sale price, advertising or bidding rules).
6. Provide required notices and follow sale procedures. Iowa probate procedures require notice to heirs, beneficiaries, and creditors in certain situations. Follow the court’s directions for sale advertising, public sale, or private sale as ordered.
7. Close the sale and pay off the mortgage. At closing, a title company or closing attorney typically obtains the lender’s payoff statement and disburses funds to satisfy the mortgage lien so the buyer receives clear title.
8. Report and distribute net proceeds. After paying debts, taxes, closing costs, and mortgage payoff, the representative distributes remaining funds per the will or Iowa intestacy rules, with accounting to the court and beneficiaries.

Common scenarios you may encounter

• If the house was jointly owned with right of survivorship or held in a living trust, probate may not be required and the surviving owner or trustee often can sell without probate. Check the deed or trust documents.
• If the estate lacks enough cash to pay the mortgage, the representative can sell the property to raise funds to pay debts. The court typically allows this, but may require certain procedures or creditor notice.
• If a beneficiary wants to keep the house, they may be able to buy it from the estate (pay the mortgage or refinance) — but this often requires appraisal and disclosure to other beneficiaries and possibly court approval to ensure fairness.
• If the mortgage is in default, the lender can foreclose even during probate unless the representative takes action (pay, negotiate, or sell quickly). Communicate with the lender immediately to avoid foreclosure.

Practical tips and timing

Probate can take months to more than a year depending on the estate complexity. Selling can speed up creditor payment and distribution, but expect extra time if the court must approve the sale. Title companies and buyers may require evidence of the representative’s authority (letters) and a court order if the sale involves contested issues or statutory procedural requirements.

When you should get legal help

Consider hiring a probate attorney if any of the following apply:

• The will doesn’t clearly authorize sale, or no will exists;
• Heirs or beneficiaries disagree about selling;
• The estate cannot pay debts without the sale;
• The mortgage is in default or a lender threatens foreclosure;
• The title company asks for a court order or other unusual documentation.

Helpful Hints

• Find and bring the death certificate, will, deed, mortgage statement, and any mortgage note to your first meeting with the lender or attorney.
• Obtain “letters testamentary” or “letters of administration” from the probate court to show you have authority to act.
• Ask the lender for a written payoff statement (include effective date) early — payoffs change daily because of interest.
• Ask buyers or real estate agents about title company requirements; some will want a court order before closing on estate property.
• If you are low on estate cash, discuss short-term options with the lender (forbearance) to avoid foreclosure while arranging a sale.
• Keep detailed records and an accounting of the sale, mortgage payoff, and distribution of proceeds for the probate court and beneficiaries.
• Consider tax consequences and speak to a tax professional about capital gains and estate tax issues; Iowa does not currently have a state inheritance tax, but federal tax rules may apply.