Legal Question in Wills and Trusts in Iowa

My mother died in 2011 and her $200,000 house has a remaining home loan on it for $16,567 (home improvement loan funds used to install a new HVAC system a few years ago for that property). Does the estate have to pay off that debt in full before this property can be given to the inheritors (her daughters)? Or can the property be passed down to the inheitors with the loan still in place, and they just take over the payments?
My sister says that the loan must be paid off in full for the property ownership to transfer, I am not so sure.
Bottom Line Question----
Is my sister correct in her assertion that Iowa Estate Law REQUIRES the estate to pay off the real estate loan improvement loan which is attached to the residence as part of the estate debts? I can understand the estate having to pay off medical bills and credit card debt, but a mortage against real property seems like a different animal. FYI--This estate is NOT liquid so there is no cash on hand to help with this estate. In fact we will be selling some farm acreage we inherited many years ago to pay for medical bills and consumer debt as it is. I would rather see this home improvement loan continue as is and get paid off over the term of the initial loan on a monthly basis by the sister who is still living in the house.
Thanks for your opinion.

Asked on 1/29/12, 12:57 pm

Robert Luedeman solo practitioner

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0 attorneys agreed

Your sister is correct. That loan must be paid back out of the estate.

Answered on 1/30/12, 8:55 pm

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