- A mortgage does not disappear at death: as between people claiming through the deceased, the mortgaged property is generally primarily liable for its own mortgage debt unless the will or another document says otherwise.
- How the home passes in Alberta depends on how it was owned: a surviving joint tenant can be registered without probate, but sole or tenant-in-common land passes through the estate.
- What the lender may do on death, and whether you can assume or refinance, depends on the mortgage contract and lender policy, so contact the lender early.
When a homeowner dies, the people left behind usually worry about two things at once: whether the lender can demand the whole balance, and whether they can stay in the home or sell it. The answers depend on the mortgage contract, how the home was owned, and what the will says.
This article explains the Alberta rules that help answer those questions in plain terms. It cannot tell you what your lender will do, because that depends on your mortgage documents. A lawyer can review them with you.
This article covers the law of Alberta.
Who is responsible for the mortgage debt?
A personal representative has a duty to satisfy the debts and obligations of the estate. A claim against a deceased person is a claim against the estate, and heirs are not named as the debtors. A mortgage is one of those debts.
Between the people who claim through the deceased, the mortgaged property is generally primarily liable for its own mortgage debt, unless the will or another document shows otherwise. Each part of the property bears its proportionate share. A general direction in a will to pay debts does not shift the mortgage onto other assets.
There are two limits. A will can direct that the mortgage be paid from other assets if it refers to the mortgage expressly. And this rule does not stop a lender from pursuing other estate property.
Can the lender sue the family personally?
Alberta's Law of Property Act restricts a mortgage lender's right, generally, to the land the mortgage covers, plus foreclosure. No action lies on the covenant for payment in the mortgage, and waivers of this are void.
This has exceptions you should know about:
- The protections do not apply to mortgages given by a corporation, though they do apply to an action against an individual.
- Certain National Housing Act and high-ratio mortgages are excluded from the protection for people who take over a mortgaged property, so insured mortgages can carry personal liability.
- The individual protections apply only to residential land and farm land. In the residential case, they do not apply if the individual or a family member has ever used the land as a bona fide residence, and the individual bears the burden of proof.
- A reverse mortgage is different: the death of the last borrower triggers repayment, and the estate typically has a limited window.
A person who takes over a mortgaged home is generally protected from a personal suit on the covenant, subject to the exceptions above, including the bona fide residence exception. Whether your mortgage falls within an exception is worth confirming with a lawyer.
How the home passes depends on how it was owned
| How the deceased owned the home | How title changes |
|---|---|
| Joint tenant with a survivor | The survivor files a Statutory Declaration regarding Proof of Death with an original or notarized death certificate; no grant of probate is needed. |
| Tenant in common or sole owner | The land passes through the estate. Land Titles requires an Application for transmission to personal representative with an original filed copy of the Grant of Probate or Letters of Administration; a notarized copy is unacceptable. |
| Grant issued outside Alberta | The grant must be re-sealed by the Surrogate Court of Alberta before Land Titles will accept it. |
Whether a change of title affects the mortgage depends on the mortgage contract and your lender's policies, so check with the lender before you assume anything.
Keep paying, assume, refinance or sell
Whether the lender allows payments to continue, lets someone assume the mortgage, or requires refinancing depends on the mortgage contract and the lender's policy. Do not assume any option is available until the lender confirms it in writing.
Delay has a cost. The personal representative must act with the care, diligence and skill of a person of ordinary prudence and distribute the estate as soon as practicable. Letting a mortgage fall into arrears while you wait can put the home at risk.
If the home will be sold, the person who can sign for the estate must usually be confirmed first. For sole or tenant-in-common land, that means a grant from the Surrogate Court of Alberta. A lender with a mortgage keeps its security, but how the rest of the sale proceeds are divided depends on the estate's other debts and expenses and on the will, so it is worth confirming with a lawyer.
What to do next
- Find the mortgage documents, the most recent statement and the land title.
- Check how the home was owned: joint tenants, tenants in common or sole owner.
- Read the will for any reference to the mortgage.
- Contact the lender, tell them about the death and ask in writing about continued payments, assumption and refinancing.
- Confirm whether it is a reverse mortgage, since repayment timing can be short.
- Speak with a lawyer before signing anything that makes you personally responsible for the debt.
Frequently asked questions
Do I have to pay my parent's mortgage out of my own money?
Generally the debt is a claim against the estate, and heirs are not named as the debtors. The mortgaged property is also generally primarily liable for its own mortgage debt. Exceptions can apply, such as insured mortgages for people who take over a mortgaged property, so have the documents reviewed.
Do I need probate to deal with a jointly owned home?
If the deceased was a joint tenant, the survivor can be registered by filing a Statutory Declaration regarding Proof of Death with a death certificate, and no grant of probate is needed. If the deceased was a tenant in common or sole owner, the land passes through the estate and a grant is required.
Can the lender demand the full balance when the owner dies?
That depends on the mortgage contract and the lender's policy, so ask the lender in writing. For a reverse mortgage, the death of the last borrower triggers repayment.
What if the will says to pay debts?
A general direction to pay debts does not shift a mortgage onto other assets. An express reference to the mortgage can direct that it be paid from other assets.
Sources
- Estate Administration Act, SA 2014, c E-12.5 (Alberta King's Printer) — kings-printer.alberta.ca
- Law of Property Act, RSA 2000, c L-7, s. 40 — kings-printer.alberta.ca
- Financial Consumer Agency of Canada – Reverse mortgages — canada.ca
- Alberta.ca – Change land title ownership — alberta.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
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