Detailed answer
Short version: While an estate is in probate in Vermont, the person appointed by the probate court to manage the estate (the personal representative) is generally responsible for protecting estate property, which usually includes keeping mortgage payments and essential utilities current. If payments stop, a lender can pursue foreclosure and a utility can disconnect service. The personal representative should act promptly to preserve value and avoid avoidable expenses or loss.
Who is responsible for mortgage payments and utilities?
When someone dies, title to property typically passes to the estate (unless the property automatically transfers by joint tenancy, beneficiary deed, or other right-of-survivorship mechanism). If the home or other real estate is owned by the decedent and is subject to a mortgage, the debt remains tied to the property. The personal representative (sometimes called an executor or administrator) appointed by the Vermont probate court has a duty to protect estate assets and pay legitimate debts and expenses from estate funds. That duty commonly includes continuing mortgage payments and maintaining necessary utilities while the estate is being administered.
What legal authority governs these duties?
Vermont’s probate statutes set out the duties and powers of personal representatives and how estates are administered. See Title 14 of the Vermont Statutes for the probate and fiduciary rules that apply to estate administration: 14 V.S.A. (Vermont statutes, Title 14). The probate court issues letters (letters testamentary or letters of administration) that give the personal representative authority to act and to provide to third parties (lenders, utility companies) as proof of authority.
What happens in practice?
- The mortgage lender still expects payments. If payments stop, the lender can follow its contractual and statutory remedies, including charging late fees and eventually foreclosing.
- Utilities can be shut off if not paid. Utilities usually require the account holder or an authorized representative to put the account in a new or estate-name and to provide proof of authority from probate court.
- The personal representative should open an estate account and pay bills from estate funds when cash is available and when payment is necessary to preserve assets (for example, mortgage, insurance, property taxes, and utilities needed to prevent damage to the property).
- If the estate lacks cash to cover ongoing expenses, the personal representative has several options: negotiate with the mortgage lender (forbearance, loan modification, short-term relief), obtain court authorization to sell the property, or seek court permission for other measures to pay debts. The probate court can authorize a sale of estate real property if needed to pay debts or distribute assets.
Special situations to watch for
- Joint owners or surviving co-signers: If the mortgage is in the decedent’s name and a surviving co-borrower (for example, a spouse or co-owner) is on the loan, that person remains responsible for payments. The lender can pursue the co-borrower directly.
- Nonprobate transfers: If the property passed outside probate (by joint tenancy, transfer-on-death, or beneficiary deed), the new owner may be responsible for mortgage payments and utilities even if probate is pending for other assets.
- Insurance and taxes: Maintaining hazard insurance and paying property taxes are often urgent because failure to maintain insurance exposes the estate to loss and unpaid taxes may result in liens.
Practical steps for a personal representative
- Obtain letters testamentary or letters of administration from the probate court as soon as possible. These documents prove your authority to act to banks, utility companies, and lenders.
- Secure the property: change locks if necessary, check for urgent repairs, and document the condition.
- Open an estate bank account and keep estate funds separate from personal funds.
- Contact the mortgage lender immediately to inform them of the death, ask about payment options, and request a short-term plan if estate cash is limited.
- Contact utility providers to transfer or maintain service; provide probate letters where required and arrange billing to the estate account if possible.
- If the estate does not have funds, consider asking the probate court for authorization to sell the property or to borrow against estate assets to cover necessary expenses.
What if mortgage or utility bills are not paid?
If the estate does not keep current on mortgage payments, the lender may start foreclosure proceedings under its loan documents and applicable Vermont law. If utilities are not paid, the company may disconnect service and that can cause damage or lower value of the property (for example, frozen pipes in winter). Acting quickly to communicate with creditors and utilities usually limits risk.
Where to look in Vermont law: The probate rules and the duties and powers of personal representatives are found in Title 14 of the Vermont Statutes. For practical probate procedure and local forms, see the Vermont Judiciary probate pages: Vermont Judiciary and the statutes at https://legislature.vermont.gov/statutes/title/14.
Important disclaimer: This information is educational only and does not constitute legal advice. It is not a substitute for speaking with a licensed Vermont attorney about the specific facts of your situation.
Helpful Hints
- Get court-issued proof of your authority (letters) quickly; many lenders and utilities will not act without them.
- Prioritize mortgage, hazard insurance, and taxes—these protect the estate’s value.
- Document all communications with lenders and utilities in writing and keep copies of responses.
- Ask lenders about hardship options (forbearance, loan modification) if estate funds are temporarily short.
- Don’t mix estate and personal funds. Use a separate estate account for payments and receipts.
- If you expect to sell the property, consult probate rules early—court approval may be required and early marketing can preserve value.
- If you’re unsure what to do, consult a Vermont probate or estate attorney for guidance tailored to your facts.