Detailed Answer
Short version: During probate in New Jersey, the person appointed to administer the estate (the executor or administrator) must protect estate property and generally should arrange to keep mortgage payments and utility services current. If the estate has cash or income, those funds are used to pay necessary ongoing expenses. If the estate lacks funds, the administrator must take steps (contact the lender, apply to sell or refinance the property, or seek court permission) to avoid foreclosure or utility shut-off. Secured creditors — including mortgage holders — keep their rights against the property regardless of probate.
Who is responsible while the estate is in probate?
After someone dies, title to assets that required probate remains in the decedent’s name until the Surrogate’s Court issues “letters” (letters testamentary or letters of administration) to the appointed fiduciary. Once appointed, the fiduciary is responsible for preserving estate assets and paying valid debts and necessary expenses of administration, which commonly include mortgage payments, property taxes, homeowner insurance, and utilities for occupied or marketable property.
Before a fiduciary is appointed, no one other than a surviving co-owner or a property title-holder has legal authority to use estate funds. That is why it is important for an interested person to open probate promptly when a mortgaged property is part of the decedent’s estate.
Mortgage payments
- Mortgage lenders have a secured interest in the real property. That security interest remains enforceable even while the estate is in probate. If mortgage payments stop, the lender can eventually start foreclosure proceedings under New Jersey law. (See New Jersey Courts information on foreclosure: njcourts.gov — Foreclosure.)
- The executor/administrator should locate the mortgage statement, contact the lender immediately, and tell them the borrower died and an estate is being opened. Many lenders have procedures for this situation and may offer temporary forbearance, payment arrangements, or directions for escrow payment.
- Who ultimately pays? Priority is: (a) if the estate has cash or liquid assets, the fiduciary should use estate funds to pay mortgage installments as an ordinary expense of administration; (b) if there is a surviving co-borrower or co-owner, that person remains personally responsible for the loan; (c) if neither the estate nor survivors can pay, the lender may foreclose and sell the property; proceeds from a sale go to satisfy secured debt before distributing to heirs.
- The fiduciary may seek court permission to sell the property to pay debts or to avoid foreclosure. The Surrogate’s Court oversees estate administration and can authorize sales when needed. See New Jersey Surrogate’s Courts information: njcourts.gov — Surrogate’s Courts.
Utilities (gas, electric, water, trash, internet)
- Utilities are normally considered necessary expenses to maintain estate property. The fiduciary should continue utility service when needed to protect and preserve the property (for showings, winterization, maintaining appliances, preventing freezing pipes, etc.).
- Utility companies will usually require either the executor/administrator’s documentation (letters) or a surviving account holder to keep services on. If the estate lacks funds, the fiduciary can ask the utility for a short extension or arrange for services to be billed to a survivor if appropriate.
- If utilities are disconnected and the property is vacant, the value of the property can fall and costs to restore service can rise. Keeping utilities on while preparing to sell or transfer title often protects estate value.
Practical options for the fiduciary
- Open probate promptly and obtain letters from the Surrogate’s Court so you can deal with lenders and companies formally.
- Gather mortgage statements and utility bills. Start with the most recent statements and check account contact information.
- Contact the mortgage lender immediately to notify them and ask about options (payment, forbearance, escrow, short sale, deed in lieu, requirements for estate administration).
- Use estate cash to pay ordinary expenses if available. Keep detailed receipts and records — fiduciaries are accountable to the court and beneficiaries.
- If the estate lacks liquidity, consider options: sell the property with court approval, seek a loan from an heir, negotiate forbearance with the lender, or file an expedited application with the surrogate to authorize a sale or to request interim relief.
- Where property avoids probate (joint tenancy, title in trust, or beneficiary deed), the survivor or trustee generally handles mortgage and utilities directly — probate will not control those assets.
Timing, creditor claims, and priority
New Jersey probate follows statutory procedures for giving notice to creditors and addressing claims during administration. Priority rules generally treat secured creditors (like mortgagees) differently than unsecured creditors: secured claims are enforced against the property that secures them. For general information about estate administration in New Jersey, consult the Surrogate’s Court resources and New Jersey Courts self-help materials: njcourts.gov — Surrogate’s Courts and njcourts.gov — Self-Help.
What heirs and beneficiaries should know
- Heirs are not personally liable for the decedent’s mortgage unless they were co-signers or co-owners on the loan.
- Beneficiaries who inherit the property may need to pay the remaining mortgage or arrange to refinance or sell. The estate must clear liens before distributing clear title unless beneficiaries accept property subject to the mortgage.
- If you are a beneficiary worried about foreclosure or utilities being cut, ask whether the executor has opened probate and present proof of your inheritance claim if you are willing to help keep payments current.
When to get legal advice
If the mortgage lender refuses to work with the fiduciary, if there is a risk of imminent foreclosure or utility termination, if competing claims exist among heirs, or if the estate lacks funds to preserve the property, consult a New Jersey probate or real estate attorney. An attorney can help obtain urgent court orders, negotiate with lenders, and guide a fiduciary through sale or refinancing options.
Helpful statutory and court resources
- New Jersey Surrogate’s Courts (information on opening and administering an estate): https://www.njcourts.gov/courts/surrogates.html
- New Jersey Courts — general self-help and foreclosure information: https://www.njcourts.gov/selfhelp/ and https://www.njcourts.gov/selfhelp/foreclosure.html
- New Jersey Legislature website (statutes, including those governing estates and fiduciary duties): https://www.njleg.state.nj.us/ (look for Title 3B — Estates and Fiduciaries)
Helpful Hints
- Act quickly: open probate and apply for letters so the fiduciary can legally manage bills and negotiate with creditors.
- Contact the mortgage servicer and utility providers right away to explain the situation and request temporary accommodations.
- Keep careful, dated records of every call, payment, and written communication with lenders and utilities.
- Don’t assume heirs are personally responsible for mortgage debt unless they co-signed or hold title with rights of survivorship.
- Consider short-term solutions (forbearance, heir loan, or court-authorized sale) rather than letting payments lapse and risking foreclosure.
- If property is vacant, maintain insurance and winterize to avoid damage that will lower value or increase repair costs.
- When in doubt, contact the Surrogate’s Court or a New Jersey probate or real estate attorney to protect estate value and limit personal liability.
Disclaimer: This article explains general information about how mortgage payments and utilities are handled during probate in New Jersey. It is educational only and is not legal advice. For advice about a specific situation, consult a licensed New Jersey attorney or the Surrogate’s Court.