Handling Mortgage Payments and Utilities While an Oregon Estate Is in Probate

Disclaimer: This article is educational only and is not legal advice. For decisions about a specific estate, consult a licensed Oregon attorney.

Detailed answer

Overview: who controls bills after someone dies?

When a person dies, their assets and debts become part of the decedent’s estate. A personal representative (sometimes called an executor or administrator) appointed by the probate court is responsible for managing estate property, paying valid debts and expenses, and preserving estate assets until distribution. The personal representative’s duties include dealing with secured loans (like a mortgage) and ongoing bills (like utilities).

Mortgage payments during probate

– The mortgage is a secured debt attached to the real property. The loan does not automatically disappear when the borrower dies. The lender retains its security interest (the mortgage or deed of trust) in the property until the loan is paid, refinanced, or the property is sold.

– The personal representative should determine whether estate funds can and should be used to keep making mortgage payments. Paying the mortgage preserves the property and prevents foreclosure. If the estate has insufficient funds, the representative must weigh options such as selling the property, refinancing, or negotiating with the lender.

– Heirs or beneficiaries are not personally liable for the mortgage simply because they inherit the property, unless they co-signed the loan. Instead, a beneficiary who accepts title to a property takes it subject to the mortgage (the lender’s lien remains). If payments lapse, the lender may proceed with foreclosure under Oregon law.

– Lenders may offer options on notice of the death: temporary forbearance, loan modification, or allowing assumption of the loan by an heir if permitted by loan terms. Prompt contact with the loan servicer reduces the risk of foreclosure.

Relevant resources on Oregon law and probate procedure: Oregon Revised Statutes and Oregon Judicial Department probate information. For statute text and related rules, see the Oregon Revised Statutes (ORS) and the Oregon courts’ probate pages: ORS Table of Contents, and Oregon Judicial Department – Probate.

Utilities while the estate is open

– Utilities (electricity, gas, water, phone, internet) are contract services in the decedent’s name. Providers typically require someone with legal authority (property owner, occupant, or personal representative) to request continuation or transfer of service.

– Many utility companies will require payment histories, a deposit, or proof of the personal representative’s authority (letters testamentary or letters of administration issued by the probate court) before placing service in the estate or another person’s name.

– If utilities are not paid, providers can shut off service. If a property becomes vacant during probate, utilities may be turned off unless someone makes arrangements to keep them on to maintain the property for sale or occupancy.

Practical interaction between mortgage, utilities, and probate timing

– Open a bank account for the estate as soon as possible. Estate funds allow the personal representative to pay mortgage, taxes, insurance and utilities. The court issues letters that authorize the representative to act.

– Prioritize payments that keep the property intact: hazard insurance, property taxes (or tax installments), and mortgage payments. Unpaid mortgage or property insurance can accelerate loss of the estate asset.

– If the estate lacks cash, the personal representative can ask the court for authority to pay extraordinary expenses or to sell the property to pay debts. Oregon probate procedures explain how a representative obtains court permission for sales and creditor claims (see Oregon probate resources above).

What happens if bills aren’t paid?

– Mortgage: the lender can begin default remedies up to nonjudicial foreclosure (common for deeds of trust) if payments lapse. Delinquency timelines and notice requirements are governed by Oregon’s foreclosure law and the loan documents.

– Utilities: providers may discontinue service for nonpayment. If a property is vacant and utilities are shut off, that can harm the property (frozen pipes, mold, etc.) and lower sale value or ability to rent.

When property is sold or distributed

– If the personal representative sells the property during probate to pay debts, mortgage payoff is one of the costs paid from sale proceeds. If the sale does not cover the mortgage, the remaining deficiency is handled under Oregon law and in accordance with lender rights and the estate’s finances.

– If a beneficiary receives title to the property after probate closes, they take it subject to any outstanding mortgage. The beneficiary then decides whether to keep the property and continue payments, refinance, or sell.

Where Oregon law matters

– Oregon’s probate procedures set who has authority to act for the estate and how to obtain court-issued letters. See the Oregon Judicial Department for forms and procedures: Oregon Judicial Department – Probate.

– Foreclosure and lender remedies are governed by Oregon statute and case law. Lenders and trustees must follow statutory notice and process in Oregon before foreclosure. For statutory texts and chapters related to loans and foreclosure, see the Oregon Revised Statutes: ORS Table of Contents.

When to contact an attorney

– Contact an Oregon probate attorney if the estate lacks liquidity to keep up mortgage and essential bills, if heirs disagree about keeping or selling property, or if the lender threatens foreclosure. An attorney can help the personal representative understand duties, seek court authorization for actions, negotiate with lenders, and protect estate assets.

Helpful hints

• Secure the property immediately and inventory all accounts and statements (mortgage, utilities, insurance, taxes).
• Obtain the death certificate and apply to the probate court for letters testamentary or letters of administration right away—many companies will require those documents before talking to the personal representative.
• Open an estate bank account and keep detailed records of every payment and expense.
• Notify the mortgage servicer and utility companies promptly. Ask about options like short-term forbearance, transferring account to estate, or assumptions allowed under the loan.
• Prioritize payments that prevent loss of the asset: mortgage, hazard insurance and property taxes first; then utilities and maintenance costs.
• If the estate is insolvent (debts exceed assets), get legal advice before making decisions—paying some creditors and not others can create liability for the personal representative.
• If heirs want the home and can afford the mortgage, explore a refinance or assumption (if the lender allows). If no one can afford it, consider an expedited sale to prevent foreclosure and reduce costs.
• Keep beneficiaries informed. Transparency reduces conflict and can speed cooperative solutions such as a family buyout or agreed sale.

If you are handling an Oregon estate and want help locating an attorney or figuring out next steps, consult the Oregon State Bar or the Oregon Judicial Department’s probate resources to find local assistance.