Can a Reverse Mortgage Be Left to Heirs in Ontario When the Homeowner Dies?

A reverse mortgage does not disappear when the homeowner dies. The lender keeps its security against the home, even if the estate cannot pay all its debts. The repayment deadline and the family's options depend on the wording of the loan agreement, so read it and ask the lender to confirm in writing.

The home passes to the estate trustee, who holds it for the people entitled to it. Real property is liable for the deceased's debts, costs and expenses in the same way as other property. An estate trustee can sell estate real property without the beneficiaries agreeing, except where the sale is only for distribution, which needs the approval of a majority of the beneficiaries.

Unless the deceased showed a contrary intention, a beneficiary who receives mortgaged property takes it primarily liable for the mortgage debt. A beneficiary who keeps the home and assumes the mortgage may owe land transfer tax on the balance outstanding at registration. If the debt is larger than the home's value, how much the lender can claim beyond the home depends on the loan terms, so get legal advice early.