Detailed Answer
This article explains, under South Dakota law, who is responsible for mortgage payments and utility bills while a decedent’s estate is in probate, what can happen if payments stop, and practical steps to protect the property. This is a general explanation to help you decide whether to consult a lawyer.
Who controls payments during probate?
When someone dies, their estate must be administered. In South Dakota the person who administers the estate (called the personal representative, administrator, or executor) has the duty to collect estate assets, protect them, and pay valid debts and administrative expenses out of estate funds before distributing assets to heirs or beneficiaries. See SDCL Title 29A (Uniform Probate Code) for the statutory framework: https://sdlegislature.gov/Statutes/Title/29A.
Mortgage payments
- If the decedent owned a home outright with no mortgage, the personal representative typically only needs to secure and maintain the property until it is sold or transferred.
- If there is a mortgage, the mortgage remains attached to the property. The mortgage company is a secured creditor and can enforce the mortgage (including foreclosure) if payments stop. The mortgage does not disappear because of death.
- The personal representative should determine whether estate funds exist that can be used to keep the mortgage current. Administrative expenses (including costs to preserve property) are generally paid from estate assets before distributions. If estate funds are insufficient, the lender can pursue foreclosure according to its loan documents and state foreclosure procedures.
- Beneficiaries who inherit the property may choose to keep it by continuing payments, refinancing, or formally assuming the mortgage if the lender agrees. Otherwise the lender may foreclose and sell the property to satisfy the debt.
- If the property owned by the decedent was held jointly with right of survivorship (for example, joint tenancy), that ownership arrangement may avoid probate and the surviving owner may already control the property (and the mortgage obligation). Check title records to confirm.
Utilities (electric, gas, water, sewer, trash, phone, internet)
- Utilities are treated as household service obligations. The personal representative should keep utilities on as needed to protect the property (prevent freezing pipes, preserve appliances and the structure) while the property is in the estate.
- Utilities billed to the decedent become claims against the estate if unpaid. The utility provider may seek payment from the estate and may have the contractual right to disconnect service if bills go unpaid. A forced disconnection can damage the property and reduce estate value.
- Service can often be transferred into the name of the estate or a new occupant. Utility companies vary in what they require to make the transfer (death certificate, probate case number, or personal representative identification).
Priority and payment source
Administrative expenses (including reasonable costs to preserve estate property) usually have priority over distributions to beneficiaries. That means the personal representative may use estate bank accounts, the decedent’s checking/savings, or sale proceeds of estate assets to pay the mortgage and utilities. If no estate funds exist, secured creditors can enforce their security (foreclosure) and unsecured creditors make claims against the estate under the usual creditor-claim process in probate. See SDCL Title 29A for creditor claims and administration rules: https://sdlegislature.gov/Statutes/Title/29A.
Practical consequences if payments stop
- Mortgage: missed payments can lead to default, late fees, credit reporting, and eventually foreclosure if the lender follows the contract and state foreclosure law.
- Utilities: unpaid utility bills may lead to service termination and possible damage to the property (e.g., frozen pipes, mold), which reduces estate value and can create additional repair costs.
- Beneficiaries: beneficiaries generally do not become personally liable for the decedent’s mortgage or utility bills unless they agree to assume the debt, or they receive the property and then fail to pay ongoing obligations on it.
Typical steps a personal representative should take
- Locate the will (if any) and letters testamentary or letters of administration from the probate court.
- Open an estate bank account and use estate funds to pay necessary and reasonable expenses, including mortgage and utilities, as allowed by probate rules.
- Contact the mortgage lender and utility companies early to notify them of the death and ask about options (deferment, payment arrangements, transfer requirements).
- Secure the property: change locks if appropriate, maintain heat in winter, and keep insurance current to prevent loss.
- Keep detailed records and receipts of all payments and communications; these are part of estate accounting and will be needed before final distribution.
When the estate lacks money to pay
If the estate is insolvent (debts exceed assets), the personal representative must follow the statutory order of payment for creditors. Secured creditors (mortgage lenders) generally have stronger remedies (foreclosure) compared with unsecured creditors (e.g., ordinary utility bills), but utilities that are necessary to preserve property may be treated as administrative expenses. In insolvent estates, it is especially important to get legal advice on priorities and whether to preserve the asset for eventual distribution or allow the secured creditor to foreclose.
Helpful Hints
- Contact the mortgage lender immediately to explain the situation. Lenders sometimes offer options for deceased borrowers, including short-term forbearance or loan review.
- Keep utilities on if the property needs protection. The cost of continued utilities can be small compared with the cost of repairing storm or freeze damage.
- Open an estate account as soon as you have authority from the probate court. Deposit any decedent funds and pay necessary expenses from that account to avoid mixing personal funds with estate funds.
- Locate homeowners insurance and keep it in force until the property transfers. Notify the insurer of the death and confirm coverage continues while the estate is being administered.
- If you are a beneficiary who wants to keep the home, talk early with the lender about loan assumption or refinancing and with an attorney about the best way to receive the property in probate.
- Document everything: date-stamped notices, phone calls (who you spoke to), and copies of bills and payments are important for estate accounting and defending against creditor claims.
- If foreclosure or utility shutoff is threatened, consult a South Dakota probate attorney quickly. The statutes and court rules control creditor rights and the timing of claims.
Where to look in the law
South Dakota’s probate rules and a personal representative’s powers and duties are in SDCL Title 29A (Uniform Probate Code). For creditor-claim procedures and payment priorities, review the administration and claims chapters of Title 29A: https://sdlegislature.gov/Statutes/Title/29A.
Disclaimer
This information is educational only and is not legal advice. Laws vary by state and facts matter. For advice about a specific estate, mortgage, or utility issue in South Dakota, contact a licensed South Dakota probate attorney.