Who Pays the Mortgage, Taxes, Insurance and Utilities While a House Is in Probate?

When someone dies and leaves behind a house, the expenses associated with that house don’t stop.

The mortgage is still due. Property taxes continue to accrue. The insurance policy needs attention. The power, water and heat may need to stay on. There may be HOA dues, landscaping expenses, repairs and other ongoing costs.

For a newly appointed Personal Representative, this can lead to a very practical question:

Who is supposed to pay for all of this while the house is in probate?

In most Washington probate estates, the basic answer is fairly straightforward: expenses necessary to preserve and maintain estate property are generally expenses of the estate.

But the practical reality can be a little more complicated, especially when the estate is short on cash.

Here are some of the things I think every Personal Representative should consider when there is a house involved.

The House Still Belongs to the Estate

One helpful way to think about this is that the house doesn’t immediately become the property of the heirs simply because someone has died.

The property is now part of the deceased person’s estate, and the Personal Representative is responsible for administering that estate.

Eventually, the house might be sold. It might be distributed to a beneficiary. An heir might buy out the interests of other beneficiaries.

But until those decisions are made and properly carried out, somebody needs to protect the property.

That generally means keeping necessary expenses current.

Who Pays the Mortgage During Probate?

If there is a mortgage on the house, the borrower’s death does not make the loan disappear.

Payments still need to be addressed.

Ideally, the estate has enough liquid assets to continue making mortgage payments while the Personal Representative determines what will happen with the property.

If the house will eventually be sold, the remaining mortgage balance is typically paid from the sale proceeds at closing.

The bigger concern is what happens between the date of death and the eventual sale.

Missing payments can create late fees, collection problems and eventually the possibility of foreclosure. That can turn an otherwise manageable estate property into a much more urgent problem.

If there is a mortgage, I recommend that the Personal Representative discuss it with the probate attorney early and make sure there is a clear plan for keeping the loan current.

What About Property Taxes?

Property taxes continue whether the owner is alive or not.

In Whatcom County, property taxes are generally paid in two installments each year. If they are not paid when due, interest and penalties can begin accumulating.

Property taxes are also secured by the real estate itself.

If an estate property is being sold, outstanding property taxes can generally be accounted for through the closing process. But allowing unnecessary penalties and interest to accumulate usually doesn't benefit anyone.

This is another expense that should be identified early.

Homeowners Insurance Deserves Immediate Attention

Of all the expenses associated with an estate property, insurance is one I would pay particular attention to right away.

Why?

Because the circumstances surrounding the property may have changed dramatically.

The homeowner may have been living in the house when they died. Now the property could be vacant.

That matters.

A standard homeowners insurance policy may contain provisions or limitations relating to vacancy or extended periods when the home is unoccupied. The insurer may need to be notified, and different coverage may be appropriate.

Don't assume that because an insurance policy exists, everything is automatically fine.

A vacant house has different risks than an occupied one: water leaks, freezing pipes, vandalism, theft, unnoticed storm damage and other problems can become much more serious when nobody is there every day.

The Personal Representative should contact the insurance company or agent and make sure the property remains appropriately insured.

Should We Keep the Utilities On?

Usually, at least some of them.

Turning everything off immediately can create more problems than it solves.

In Northwest Washington, heat may be necessary during colder months to protect plumbing and control moisture. Electricity may be needed for heating systems, sump pumps, security systems or simply for contractors and others working at the property.

Water may need to remain available while the house is being cleaned or prepared for sale.

The correct answer depends on the house, the season and what is going to happen with the property.

The goal isn't to maintain the house as though someone is still living there.

The goal is to protect the asset without wasting estate money.

Don't Forget the Less Obvious Expenses

The mortgage and utilities are easy to identify.

The smaller expenses are the ones that can sneak up on an estate.

There may be:

HOA dues.

Lawn care.

Garbage service.

Security monitoring.

Propane deliveries.

Septic maintenance.

Well equipment.

Pest control.

Snow removal.

Minor repairs.

Cleaning.

Tree or storm cleanup.

These expenses individually may not seem significant, but they can add up quickly, particularly if probate lasts for many months.

One of the first things I like to do with an estate property is identify what it costs simply to own the house for another month.

That number can become surprisingly important when deciding what to do next.

What If the Estate Doesn't Have Enough Cash?

This is where things can become more complicated.

A person can leave behind a valuable house but very little cash.

For example, imagine an estate containing a $700,000 home, but only a few thousand dollars in the deceased person's checking account.

On paper, the estate may have substantial value.

In practice, the Personal Representative still needs money to pay insurance, utilities, taxes, maintenance and perhaps a mortgage.

That creates a cash-flow problem.

There may be several possible solutions depending on the estate, but this is an area where I would involve the probate attorney rather than improvising.

The important point is that a valuable estate is not necessarily a liquid estate.

Sometimes that becomes one of the strongest reasons to begin developing a plan for the real estate relatively quickly.

Can an Heir Pay Expenses and Get Reimbursed?

This happens frequently.

A family member may pay a utility bill, insurance premium, mortgage payment or emergency repair personally because something needs to be handled before the estate's finances are fully organized.

Whether and how that person should be reimbursed is something to discuss with the probate attorney and Personal Representative.

But from a practical standpoint, one thing is extremely important:

Keep records.

Save invoices.

Save receipts.

Document what was paid, when it was paid, who paid it and what the expense was for.

Estate administration becomes much easier when there is a clear paper trail.

Be Careful About Spending Money on Repairs

Maintaining a property and improving a property are two different things.

Fixing a leaking pipe before it destroys the floor is maintenance.

Replacing an unsafe broken exterior stair may be necessary.

Spending $60,000 remodeling the kitchen because someone believes buyers won't like the cabinets is an entirely different decision.

Before investing significant estate money into a house, I think the Personal Representative should understand what that expenditure is realistically likely to accomplish.

I've walked through many properties where the family assumed they needed to renovate before selling.

Often, they didn't.

Sometimes a relatively small amount of work produces an excellent return. Sometimes extensive improvements make sense. Other times the estate would be better served by cleaning the property thoroughly, addressing obvious maintenance issues and selling it in its current condition.

The question shouldn't be:

"How do we make this house perfect?"

It should be:

"Which expenditures are most likely to improve the estate's net result?"

Those are very different questions.

The Carrying Cost of an Estate Property Matters

This is something I encourage Personal Representatives to actually calculate.

Suppose an estate property has:

A $2,400 monthly mortgage payment.

$600 per month in property taxes.

$200 in insurance.

$250 in utilities.

$200 in landscaping and miscellaneous maintenance.

That house is costing the estate approximately $3,650 every month before anything unexpected happens.

Three additional months costs nearly $11,000.

Six months is almost $22,000.

Suddenly, time becomes part of the financial equation.

That doesn't mean an estate property should be rushed onto the market.

It means the cost of waiting should be considered alongside the potential benefit of waiting.

If spending $15,000 and taking two months to prepare a property is likely to increase the estate's net proceeds by $50,000, that may be an excellent decision.

If spending $75,000 and six months renovating might increase the eventual sale price by $90,000, the math looks very different after carrying costs, risk and selling expenses are considered.

The highest sale price is not necessarily the best result for the estate.

Vacant Houses Need Someone Watching Them

There is one more issue that isn't really an expense until something goes wrong.

Someone needs to keep an eye on the house.

I don't like the idea of an estate property sitting vacant for weeks at a time without anyone checking it.

A small plumbing leak can become a major insurance claim.

A failed furnace during a cold spell can lead to frozen pipes.

A fallen tree limb, broken window or roof leak can go unnoticed.

Even something as simple as newspapers accumulating or an overflowing mailbox can advertise that nobody is living there.

If the Personal Representative lives outside Whatcom County, this becomes particularly important.

Have a plan for who is checking the property and how often.

Make a Plan for the House Early

When I'm helping someone with a probate property in Bellingham or Whatcom County, one of my first goals is simply to understand the situation.

What is the house worth today?

What does it cost the estate every month?

What condition is it in?

Is there deferred maintenance?

Is it vacant?

Does it need to be cleaned out?

Would repairs improve the eventual return?

How long would those repairs take?

And most importantly:

What is the estate ultimately trying to accomplish with the property?

Once we know those answers, we can build a sensible plan.

You don't need to wait until probate is finished to start thinking about the real estate.

In many cases, getting good information early allows the Personal Representative to make better decisions, avoid unnecessary expenses and be ready to act when the estate has authority to do so.

If you're responsible for a probate or inherited property in Bellingham or anywhere in Whatcom County, I'm happy to spend 15 minutes talking through the house and your options with you.

You don't need to have everything figured out first.