Who Pays the Mortgage on a Deceased Person's House While the Ontario Estate Is Being Settled?

The estate trustee is the only person with legal authority to manage or distribute an estate, and whoever inherits the house generally takes it subject to the mortgage. That is the rule where the deceased owned mortgaged property and did not show a contrary intention, and the property is primarily liable for the mortgage debt as between the people claiming through the deceased.

When a person dies, their property passes to the estate trustee, who holds it for the people legally entitled after the debts are paid. Unless the will says otherwise, debts and funeral and testamentary expenses are paid out of the residuary estate, with mortgaged property being the exception described above. Relatives who are not the estate trustee have no authority to withdraw money from the deceased's sole accounts. Keep the lender informed and keep records of every bill the estate pays.

Secured creditors keep their security even when an insolvent estate shares other debts proportionately. A spouse with no ownership interest who is living in the matrimonial home may stay rent-free, as against the estate, for 60 days after the death. Property tax, insurance and what a lender can do if payments stop depend on the mortgage terms and the facts, so speak to a lawyer early.