Disclaimer

This article explains general Oregon probate principles and common options. It is educational only and not legal advice. For guidance tailored to your situation, consult a licensed Oregon probate attorney.

Detailed answer — what you need to know

1) Who controls a sale while the estate is in probate?

Once someone dies, title to most individually owned property vests in the estate. Only the person appointed by the probate court as the personal representative (called an executor if named in the will or an administrator if there is no will) has legal authority to sell estate real property. Family members or heirs cannot unilaterally sell the house unless the property passed outside probate (for example, via joint tenancy, transfer-on-death deed, or trust).

2) Is the mortgage an obstacle to sale?

The mortgage is a lien on the property. A buyer wants clear title, so the mortgage must be addressed in one of the usual ways:

• Pay off the mortgage at closing from estate funds or sale proceeds. The lender prepares a payoff statement and the lien is released.
• Buyer assumes the mortgage (if the loan terms and lender approve). Many mortgages have a due-on-sale clause that requires lender consent for assumption.
• Sell subject to the mortgage — buyer takes title but the mortgage stays in place; the lender still has the right to enforce the loan against the property and may require payment or consent.
• Short sale — if the estate owes more than the property is worth, the personal representative may seek lender approval to accept less than full payoff. Lenders must agree to a short sale.

3) Does the personal representative need court approval to sell?

Often the personal representative has authority under the will or state probate rules to manage and sell estate property as part of ordinary administration. However, certain sales may require court confirmation or specific procedures — for example when:

• The will does not authorize a sale and a substantial or unusual sale is proposed;
• The estate is insolvent and the sale is to pay creditors;
• A beneficiary objects to the sale or the price is unusually low; or
• Court-supervised administration was opened and the judge imposes additional requirements.

Because procedures vary with the estate and local probate court practice, the personal representative or interested parties sometimes petition the court for an order approving the sale or confirming the terms.

4) What about notices to creditors and beneficiaries?

Before final distribution, the personal representative must follow Oregon probate notice rules — publish or mail notices to creditors and give beneficiaries information about proposed actions. Creditors have a time window to make claims. If the mortgage or other debts remain unpaid, they are typically paid from estate assets before distributions.

5) Practical sale steps and title matters

1. Confirm ownership: Check whether the property went to the estate or passed outside probate (joint tenancy, trust, beneficiary deed).
2. Notify the lender: Let the mortgage servicer know of the death. Ask for the current payoff amount and procedures they require for estate sales.
3. Get appointed as personal representative: If you are not yet appointed, the court must issue letters testamentary or letters of administration; title companies require these documents to close.
4. Work with a real estate agent and a title company or closing attorney experienced in probate sales. They will ensure payoff, lien releases, and title insurance procedures are followed.
5. If estate funds are insufficient to pay the mortgage and debts, discuss options: short sale, lender workout, or court-authorized sale to satisfy creditors.

6) Special situations to watch for

• Joint tenancy or living trust: If the house was jointly owned with rights of survivorship or titled in a trust, it may avoid probate entirely.
• Homestead and family allowances: Oregon law provides certain protections and allowances for a surviving spouse or minor children. These can affect the estate’s ability to sell the house or how proceeds are distributed. Consult probate guidance for those rules.
• Estate insolvency: If creditors’ claims exceed assets, the personal representative must follow creditor-priority rules; the house may be sold to satisfy debts.
• Tax and mortgage escrows: Property taxes and mortgage escrow balances must be handled at closing.

7) Timeline and likely costs

Probate administration time varies. A routine sale where the estate has clear authority and funds to pay the mortgage can often close within a few months once the personal representative is appointed and paperwork is in order. If court confirmation or creditor disputes arise, it can take longer. Costs include realtor commissions, closing costs, payoff of the mortgage and other debts, probate filing fees, and attorney fees (if the estate hires counsel).

8) What should heirs or family members do now?

If you are an heir or the potential personal representative:

• Locate the will and mortgage documents.
• Contact the mortgage servicer to report the death and request payoff and servicing instructions.
• If you expect to be the personal representative, begin the probate petition with the local county probate court (or discuss with an attorney or the probate clerk about small estate options).
• Talk with a probate-savvy real estate agent or a probate attorney before listing the property so expectations about payoffs, timelines, and lender involvement are clear.

Where to find Oregon-specific legal information

For general information about probate in Oregon and court procedures, see the Oregon Judicial Department’s probate information: Oregon Judicial Department — Probate. To review Oregon Revised Statutes and related laws, use the Oregon Legislature’s ORS resources: Oregon Revised Statutes (ORS).

Helpful Hints

• Do not list, sign, or sell the house until someone has official letters from the probate court appointing them as the personal representative.
• Call the mortgage servicer early; getting a payoff amount and instructions prevents surprises at closing.
• If the estate lacks cash to pay continuing mortgage payments, protect the property by communicating with the lender to avoid default while probate proceeds.
• Consider obtaining a probate-experienced title company or closing attorney that knows how to handle estate payoffs and lien releases in Oregon.
• If heirs disagree about selling, suggest mediation or seek court guidance before proceeding — unresolved disputes can block or delay sales.
• When the mortgage exceeds value, ask the lender about short-sale procedures — lenders will sometimes accept less than full payoff for a quick, approved sale.
• Keep careful records of all estate communications, receipts, and distributions; the personal representative must account to beneficiaries and the court.