Definition
When a property owner dies, their property and attached mortgage form part of their estate. The liquidator (executor) must settle the mortgage as part of estate administration.
Options for heirs:
1. **Keep the property**: heirs wishing to retain the property must either assume the existing mortgage (with lender approval) or refinance in their own name.
2. **Sell the property**: sale proceeds first repay the mortgage, then are distributed to heirs per the will or legal devolution.
3. **Renunciation of succession**: if debts exceed assets, heirs can renounce the succession — the property then reverts to creditors.
Mortgage life insurance protection: A mortgage life insurance (or disability) policy previously taken out by the deceased may repay the entire mortgage balance upon death, allowing heirs to inherit the property free of mortgage.