Detailed answer — how this works under Michigan law

Short answer: maybe. Whether the house can be sold during probate while a mortgage remains depends on title ownership, who is legally appointed to act for the estate, the mortgage lien itself, and whether the probate court or the mortgage lender must approve the sale.

Key legal points

• Mortgage liens survive the borrower’s death. A mortgage recorded against the land remains an encumbrance on the property and will generally need to be paid off or otherwise addressed at sale.
• Only the person with legal authority over the estate can sell property that is part of probate. In Michigan, that is the personal representative (also called an executor or administrator) appointed by the probate court or named in a valid will. The probate code governs fiduciary powers and the administration of estate property (see Michigan Estates and Protected Individuals Code, Chapter 700: https://www.legislature.mi.gov/mileg.aspx?page=Chapter&chapter=700).
• If the decedent owned the house jointly with right of survivorship or the house passed outside probate (for example via a transfer-on-death deed, payable-on-death instrument, or living trust), the property typically is not part of probate and cannot be sold by the personal representative.
• When the personal representative has authority to sell, the sale will usually occur subject to the mortgage lien unless the estate pays the mortgage at closing. Many buyers will close only if the mortgage is paid off or discharged at closing.
• In some cases the personal representative needs court approval to sell real estate (for example, in certain administrations or when the will does not grant explicit power). The probate court can authorize sale terms or approve a sale if requested by the personal representative.

Common outcomes and how they happen

• Sale with mortgage payoff at closing: Most probate sales proceed like ordinary real-estate closings. The buyer’s funds pay off the mortgage at or before closing through escrow, and the remainder goes to the estate to pay debts and distribute to beneficiaries.
• Sale subject to mortgage: A buyer may agree to buy the property “subject to” the existing mortgage, but lenders often have due-on-sale or acceleration clauses. The lender may demand payoff or may consent to the transfer; lender consent is usually required to avoid acceleration of the debt.
• Sale after paying mortgage from estate assets: If the estate has cash, the personal representative can pay off the mortgage before sale to transfer clear title to the buyer.
• Sale by court order: If the personal representative lacks explicit authority or if beneficiaries contest the sale, the personal representative can petition the probate court to authorize the sale under the probate code and the court can set conditions to protect creditors and beneficiaries.

Who must be appointed before any sale?

You generally must be the personal representative appointed by the probate court before you can legally sell probate property. Trying to sell while acting only informally (without appointment) can be invalid and risky. If someone listed as owner on title had survivorship rights or the property passed outside probate, the personal representative will have no power to sell.

Creditor claims and priority

The mortgage is a secured claim against the real estate. At closing, mortgage lien payoff typically has priority over unsecured debts. The personal representative must follow statutory duties to notify creditors and to pay valid debts before distributing net proceeds to beneficiaries. See Michigan Estates and Protected Individuals Code for fiduciary duties and administration procedures: https://www.legislature.mi.gov/mileg.aspx?page=Chapter&chapter=700.

Practical steps to sell a house in probate when there’s a mortgage

1. Confirm whether the property is in probate. Check title for joint owners, transfer-on-death deeds, or trust ownership; those may take the property outside probate.
2. Determine who is authorized. If no personal representative is appointed, petition the probate court to be appointed (or confirm appointment). The court appointment gives legal authority to act for the estate.
3. Obtain a title search and payoff demand. A title company or attorney can reveal recorded mortgages, liens, and encumbrances. Request a mortgage payoff statement from the lender (amount and required payoff date).
4. Check the mortgage terms. Look for acceleration or due-on-sale clauses that could require full payoff or lender consent at transfer. Contact the lender early to discuss options.
5. Decide how to handle the mortgage. Options include paying off the loan from estate funds at or before closing, arranging payoff from sale proceeds at closing, selling subject to the mortgage (with lender consent), or obtaining court approval for private sale terms if required.
6. If required, petition the probate court. When the will doesn’t grant sale authority or when beneficiaries object, file for court approval of the sale and proposed distribution of proceeds.
7. Close the sale with title company oversight. The title company will handle payoff to the mortgage holder and clear title for the buyer, subject to court and lender requirements.

Scenarios you may encounter

• Small mortgage, buyer willing to pay: Buyer’s lender or cash proceeds pay the mortgage at closing; estate receives net proceeds for distribution.
• Mortgage balance larger than property value: The personal representative may need to negotiate a short sale with the lender or abandon the property to the lender after seeking court guidance.
• Beneficiaries disagree: If beneficiaries dispute selling, the personal representative may ask the probate court to authorize sale or resolve disputes.
• Property encumbered but owned jointly: If title shows joint ownership with right of survivorship, the property likely passes automatically and the surviving owner controls sale, though the mortgage still binds the property.

Helpful hints

• Don’t attempt to sell before appointment: Wait until a personal representative is appointed by the probate court or the property is confirmed outside probate.
• Get a title search early: It reveals mortgages, liens, and who has authority to sell.
• Contact the mortgage lender quickly: Lenders often have procedures for deceased borrowers and for probate sales; early communication avoids surprises at closing.
• Collect estate funds if available: Paying off the mortgage before sale can make the property more marketable and simplify closing.
• Consider court approval when in doubt: A court sale order reduces the risk of later disputes with beneficiaries or creditors.
• Use a title company or real-estate lawyer: They can coordinate payoff, closing, and ensure proceeds are distributed properly under Michigan probate rules.
• Watch for creditor deadlines: The estate must follow notice and claims procedures under Michigan law; ensure debts (including the mortgage) are handled in the proper order.