What Happens To Mortgage During Probate
Probate for Realtors: What Happens to a Mortgage During the Probate & The Spousal Property Petition
Mortgages In Probate
Many probates involve real estate where a mortgage or note, is secured by a deed of trust which is recorded against title of the subject real property. Properly recorded mortgages survive the death of the borrower/owner of the property, and remain as liens against the real property through probate.
As a result, mortgages are not subject to probate creditors’ claims and time limits requirements for making a claim against probate. If a mortgage is not paid off during probate administration, the lender may eventually foreclose against the real property, even during the course of a probate proceeding.
The probate administrator is not required to pay off the loan through probate. It is important to communicate with the lender through the course of the probate. If the lender knows that the subject real property is being marketed for sale during the probate, the lender will usually hold off on foreclosing, pending sale of the real property through the probate proceeding.
The Spousal Property Petition
Assets that pass to a surviving spouse can be confirmed to the surviving spouse, through a petition process in probate court. This is not a full probate, and is called a “Spousal Property Petition”.
This petition process usually takes around two months to complete, as opposed to around a year that is needed to complete a full probate. California Probate Code § 13500 provides for this petition process. The petition can be filed by a surviving spouse or surviving domestic partner. If a will exists, and the only beneficiary named in the will is the surviving spouse, then the property will pass to the surviving spouse.
If the will lists other beneficiaries in addition to the surviving spouse, then only the property listed in the will that goes to the surviving spouse is subject to the petition. If there is no will, the community property can also be passed to the surviving spouse through the “Spousal Property Petition.”
For the spousal property petition, the probate court will require that the probate form “1-DE-221, Spousal Property Petition”, be completed and signed by the surviving spouse. The petition will need to be supplemented with an explanation as to why the subject property should pass to the surviving spouse.