PastPaperHero | Titles

Learning Outcomes

This article explains the doctrine of exoneration as it applies to titles in real property for bar-exam purposes, including:

When a devisee or heir is entitled to have mortgages and other encumbrances on devised land paid from the decedent’s general estate rather than bearing the debt personally.
How to distinguish the traditional common law presumption in favor of exoneration from modern anti-exoneration statutes, especially those modeled on the Uniform Probate Code.
The treatment of mortgages, deeds of trust, and similar liens on property passing by will versus intestacy, and which party—the devisee, heir, or residuary beneficiary—ultimately bears the burden.
The significance of specific, general, demonstrative, and residuary devises in allocating secured debts and in structuring bar-exam analyses.
The role of clear will language and testator intent in overriding default rules, including the limited effect of general “pay debts” clauses.
Techniques for approaching MBE-style fact patterns involving encumbered property, anti-exoneration statutes, and competing claims of devisees, heirs, and the residuary estate.

MBE Syllabus

For the MBE, you are required to understand the rules governing the exoneration of encumbrances on real property passing at death, with a focus on the following syllabus points:

The traditional doctrine of exoneration and its application to mortgages and other liens on specifically devised real property.
The effect and operation of modern anti-exoneration statutes, including statutes modeled on the Uniform Probate Code.
The rights and obligations of devisees, heirs, and personal representatives when property is subject to a mortgage or other security interest.
The distinction between specific, general, demonstrative, and residuary devises in the exoneration context.
The requirement of clear testator intent and express will provisions to shift the burden of secured debts.
The treatment of encumbered property in intestacy and the interaction between secured debts and the estate’s general obligation to pay debts.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

Under the traditional doctrine of exoneration, if a testator devises Blackacre (subject to a mortgage for which the testator is personally liable) to A, who is primarily responsible for paying off the mortgage so that A receives the land unencumbered?
1. The devisee (A)
2. The personal representative, from the general estate
3. The mortgagee
4. The residuary beneficiary
Which of the following statements about anti-exoneration statutes is correct?
1. They require the estate to pay all debts secured by devised property.
2. They abolish the common law rule that mortgages are exonerated from the estate unless the will provides otherwise.
3. They allow devisees to demand reimbursement for property taxes.
4. They apply only to intestate succession.
If a will is silent and the jurisdiction has adopted an anti-exoneration statute modeled on the Uniform Probate Code, who bears the burden of a mortgage on specifically devised property?
1. The estate
2. The devisee
3. The residuary beneficiary
4. The executor

Introduction

When a property owner dies, the estate must deal with the decedent’s debts. Unsecured debts are straightforward: they must be paid from estate assets before distributions are made to beneficiaries. Secured debts—especially mortgages and similar liens on real property—raise a more specific question: if a will leaves encumbered land to a beneficiary, must the estate pay off the mortgage so that the beneficiary gets the land free and clear, or does the beneficiary take the land subject to the mortgage?

This question is governed by the doctrine of exoneration and, in most jurisdictions today, by anti-exoneration statutes that reverse the traditional rule.

Key Term: Exoneration
The principle that a beneficiary receiving encumbered property under a will may be entitled to have the debt securing that property paid from the decedent’s general estate, so that the property passes free of the encumbrance.

Key Term: Encumbrance
A claim or interest in property that burdens title, such as a mortgage, deed of trust, judgment lien, tax lien, or similar security interest.

Key Term: Mortgage
A security interest in real property given to secure repayment of a secured obligation, usually a promissory note. If the borrower defaults, the mortgagee can foreclose on the property.

Key Term: Deed of Trust
A security device in which the borrower (trustor) conveys title to a trustee for the benefit of a lender (beneficiary). On default, the lender can direct the trustee to sell the property, often through a nonjudicial foreclosure.

Key Term: Personal Representative
The person (executor or administrator) appointed to administer the decedent’s estate, pay debts, and distribute assets according to the will or intestacy statute.

Key Term: Heir
A person entitled under intestacy statutes to inherit from a decedent who dies without a valid will disposing of all property.

The doctrine of exoneration addresses how the burden of a secured debt is allocated between:

The devisee or heir who receives the encumbered property, and
The residuary estate and other beneficiaries, who share what is left after debts are paid.

The answer depends on whether the jurisdiction follows the traditional common law rule or a modern anti-exoneration statute, and on what the will actually says.

The Traditional Rule: Exoneration of Mortgages

At common law, if a testator made a specific devise of real property that was subject to a mortgage or other lien, the devisee was entitled to have the land “exonerated” by the payment of the lien from the general assets of the estate, unless the will clearly stated otherwise. The property was distributed to the devisee free of the encumbrance.

Key Term: Devisee
A person who receives real property under a will.

Key Term: Residuary Estate
The portion of the estate remaining after payment of debts, expenses, taxes, and specific, general, and demonstrative gifts. It is usually given to one or more residuary devisees.

Scope of the Common Law Doctrine

Key features of the traditional rule:

It applied to specific devises of real property (e.g., “Blackacre to my daughter, D”).
The testator had to be personally liable on the secured debt.
The mortgage or lien had to exist at the testator’s death.
Payment came from the residuary estate (or, if necessary, by abatement of other gifts), not from the devisee’s own funds.

Key Term: Residuary Devise
A will provision giving the residuary estate (e.g., “All the rest, residue, and remainder of my estate to R.”).

Under this rule, a residuary beneficiary might see the residuary estate substantially reduced because estate assets were used to pay mortgages on specifically devised parcels.

Rationale

The traditional rule rested on a presumption about testator intent: if a testator took the trouble to identify and gift a particular parcel of land to a named beneficiary, courts assumed the testator meant to give the land itself, not an equity interest diminished by a mortgage balance. Unless the will indicated otherwise, the personal representative had to use estate assets to satisfy the lien so that the devised land passed unencumbered.

This presumption favored specific devisees and placed the economic burden on other beneficiaries, especially residuary beneficiaries.

Personal Liability Requirement

Exoneration at common law applied only to debts for which the decedent was personally liable.

Key Term: Lien
A legal claim or charge on property to secure payment of a debt or performance of an obligation.

Thus:

If the decedent had signed the note and mortgage, the debt was a candidate for exoneration.
If the decedent had taken property subject to an existing mortgage but had not assumed personal liability on the note (e.g., a nonrecourse loan or a purchase “subject to” the mortgage), exoneration typically did not apply. In that situation, the land, not the decedent personally, was the primary source of payment.

Source of Funds for Exoneration

If exoneration applied, the personal representative:

Paid the mortgage debt from the residuary estate or, if necessary, by abatement of other gifts; and
Ensured that the specific devisee received the land free of the mortgage.

If the estate lacked sufficient personalty, real property might need to be sold to raise funds, but the specific devised property subject to exoneration was protected to the extent possible.

Modern Approach: Anti-Exoneration Statutes

Most jurisdictions have now enacted anti-exoneration statutes, abolishing or reversing the common law presumption in favor of exoneration.

Key Term: Anti-Exoneration Statute
A law providing that, unless the will expressly states otherwise, a beneficiary who receives encumbered property takes it subject to the debt, and the estate is not required to pay off the encumbrance.

Statutes in many states are modeled on the Uniform Probate Code (UPC). Under UPC-style provisions, a specific devise of property passes:

Subject to any mortgage or security interest existing at the testator’s death,
Without right of exoneration, even if the will contains a general directive to pay debts.

Policy

Modern law assumes the opposite of the common law presumption. The prevailing view is that:

A testator who leaves encumbered property as is but does not mention the debt probably expects the beneficiary to assume that burden.
Requiring the estate to pay off every mortgage would often frustrate other dispositive provisions, especially residuary gifts.

Anti-exoneration statutes thus protect residuary beneficiaries and reflect the way modern testators typically think about mortgages—as part of owning the property.

Effect of Anti-Exoneration Statutes

Under anti-exoneration statutes:

If the will is silent, the devisee or heir takes the property with the mortgage still attached.
The estate’s general assets are not used to pay off the mortgage unless the will expressly directs exoneration of that particular debt.
A general clause such as “I direct my executor to pay all my just debts” is usually not sufficient to exonerate a mortgage; most statutes require specific reference to the secured debt or to debts secured by particular property.

If the devisee fails to pay the mortgage, the lender can foreclose, just as it could have against the decedent.

Scope of Encumbrances Covered

Most anti-exoneration statutes cover:

Mortgages
Deeds of trust
Other security interests or liens securing repayment of an obligation

They generally treat all such encumbrances the same way—property passes subject to them unless the will explicitly requires payoff.

Interaction with the Estate’s General Duty to Pay Debts

Even in anti-exoneration jurisdictions, the estate must still:

Pay unsecured debts and expenses of administration from estate assets; and
Satisfy secured debts to the extent necessary if the secured creditor files a claim against the estate and the property is insufficient to satisfy the debt.

Exoneration, however, is a separate question: it is about whether the estate must voluntarily pay off a secured debt so that the beneficiary receives unencumbered property. Under anti-exoneration statutes, the default answer is no.

Specific vs. General Devises

The doctrine of exoneration traditionally applied only to specific devises of real property.

Key Term: Specific Devise
A gift in a will of a particular, identified item of property distinguishable from all others in the estate (e.g., “my house at 10 Maple Street”).

Key Term: General Devise
A gift in a will that is payable from the general assets of the estate and is not limited to any particular asset (e.g., “$100,000 to B”).

Key Term: Demonstrative Devise
A gift of a general amount that is to be primarily paid from a particular fund or asset, but that can be paid from other assets if the fund is insufficient (e.g., “$50,000 to C, to be paid from the sale of my IBM stock”).

Exoneration concerns property-specific debts, so it naturally focuses on specific devises of that property:

A specific devisee of encumbered real property might claim exoneration.
A general or demonstrative devisee usually cannot, because the gift is not tied to the encumbered asset itself.

Why the Distinction Matters

Under the traditional rule, a specifically devised parcel of land could be exonerated at the expense of the residuary estate.
Under modern anti-exoneration statutes, the specific devisee typically bears the burden of the encumbrance unless the will provides otherwise.
General and demonstrative gifts are satisfied from whatever assets remain after debts (including secured debts not exonerated) are handled.

Worked Example 1.1

Testator’s will leaves “my house at 123 Oak Street to my daughter, Sarah.” At death, the house is subject to a $200,000 mortgage for which Testator was personally liable. The will does not mention the mortgage. The jurisdiction has an anti-exoneration statute.

Who is responsible for paying the mortgage?

Answer:
Sarah receives a specific devise of the Oak Street house and takes it subject to the $200,000 mortgage. She must pay the mortgage to keep the property or risk foreclosure. The estate is not required to pay off the mortgage unless the will expressly directs exoneration of that debt.

Worked Example 1.2

Testator’s will leaves “my farm to my son, John.” The farm is subject to a $100,000 mortgage. The will states, “I direct that all debts secured by property I devise be paid from my estate.”

Who pays the mortgage?

Answer:
The clause is a clear directive to exonerate secured debts on devised property. The personal representative must use estate assets—typically from the residuary estate—to pay off the $100,000 mortgage. John receives the farm free of the mortgage.

Worked Example 1.3

Testator’s will leaves “$100,000 to my friend, F, to be raised from the sale of my house at 10 Pine Street.” At death, the Pine Street house is subject to a $50,000 mortgage. The jurisdiction follows an anti-exoneration statute, and the will does not mention the mortgage.

Who bears the mortgage?

Answer:
The gift to F is a demonstrative devise—a general amount payable primarily from a specific asset. Under the anti-exoneration statute, the house passes (for sale) subject to the mortgage. The estate sells the house, pays the $50,000 mortgage from the sale proceeds, and uses the remaining proceeds to satisfy F’s $100,000 gift. If the net proceeds are less than $100,000, F has a claim against the general estate for the shortfall, but there is no right to exoneration of the mortgage itself.

Testator’s Intent and Will Provisions

A testator can override the default rule—whether common law exoneration or a modern anti-exoneration statute—by expressly stating in the will whether the estate should pay off encumbrances on devised property. Clear language is required.

Even under anti-exoneration statutes, exoneration is still permitted if the testator specifically directs it.

Express Exoneration

Language like the following usually suffices:

“I direct that any mortgage on my residence be paid in full from my residuary estate.”
“My executor shall satisfy from my estate all debts secured by mortgages on property I devise under this will so that the beneficiaries receive such property free of liens.”

Such provisions shift the burden of mortgage debt from the devisee to the general estate and, indirectly, to the residuary beneficiaries.

General “Pay Debts” Clauses

Most anti-exoneration statutes and UPC-style provisions explicitly state that a general direction to pay debts is not enough to require exoneration of mortgages. For example:

“I direct my executor to pay all my just debts and funeral expenses.”

This language obligates the personal representative to pay unsecured debts, but it does not change the default rule that specifically devised property passes subject to existing mortgages.

Express “Subject To” Language

A testator can also indicate an intent against exoneration:

“I devise my house at 123 Oak Street to A, subject to the existing mortgage, which A shall assume.”

This language makes it clear that:

The mortgage will not be paid from the estate; and
A bears the economic burden and must pay the debt to keep the property.

Worked Example 1.4

Testator’s will provides: “I devise Blackacre to B. I direct my executor to pay all my just debts and funeral expenses.” At death, Blackacre is subject to a $150,000 mortgage. The jurisdiction has an anti-exoneration statute.

Is the estate required to pay the mortgage?

Answer:
No. The anti-exoneration statute provides that specific devises pass subject to existing mortgages unless the will specifically directs exoneration of that secured debt. A general “pay all debts” clause is not enough. B takes Blackacre subject to the $150,000 mortgage.

Application to Intestacy

If the decedent dies intestate (without a valid will disposing of the property), the property passes to heirs under the intestacy statute.

Key Term: Intestacy
The situation in which a person dies without a valid will, or with a will that does not dispose of all property, so that state intestacy statutes determine who inherits.

In intestacy:

Heirs generally take property subject to existing mortgages or other liens.
The estate is not required to exonerate the property by paying off those secured debts from general assets unless a specific statute requires it.

Many modern anti-exoneration statutes expressly extend their rules to intestate heirs, ensuring that heirs, like devisees under a will, bear the burden of mortgages on property they receive.

Worked Example 1.5

Decedent dies intestate owning Greenacre, subject to a $200,000 mortgage, and personal property worth $300,000. The jurisdiction has a statute abolishing exoneration and applying the same rule in intestacy.

Who bears the mortgage?

Answer:
The heirs inherit Greenacre subject to the $200,000 mortgage. The personal representative is not required to use the $300,000 in personal property to pay off the mortgage unless necessary to satisfy creditor claims beyond the value of Greenacre. The heirs must pay the mortgage to keep Greenacre.

Effect on Other Encumbrances

The exoneration doctrine and anti-exoneration statutes primarily address mortgages, deeds of trust, and similar voluntary security interests. They do not usually change the treatment of obligations that by law run with the land.

Real property taxes and assessments are a key example.

Annual property taxes, special assessments, and homeowner association assessments are ongoing obligations tied to ownership.
Whoever holds title when those obligations come due is responsible for paying them.

Thus, whether under common law exoneration or anti-exoneration:

The devisee or heir who receives the property typically must pay ongoing taxes and assessments.
There is no right to have the estate exonerate such obligations unless the will is very explicit, and even then some obligations may be viewed as ordinary incidents of ownership rather than debts of the decedent personally.

Additional Nuances and Exam Tips

Personal vs. Nonrecourse Obligations

As noted, traditional exoneration required personal liability of the decedent. A loan might be:

Recourse, where the lender can pursue the borrower personally; or
Nonrecourse, where the lender’s remedy is limited to foreclosing on the property.

Under the traditional rule:

Exoneration generally applied only to recourse mortgages.
If the decedent’s liability was nonrecourse, the property stood as the sole security, and there was typically no exoneration.

Under modern anti-exoneration statutes, this distinction matters less, because exoneration is largely abolished regardless of recourse status.

Relationship to Abatement and Ademption

Exoneration interacts with other wills doctrines:

Abatement determines the order in which gifts are reduced if estate assets are insufficient to satisfy all gifts after paying debts. An exoneration directive may cause residuary and even general gifts to abate to fund payoff of a mortgage on specifically devised property.
Ademption occurs when specifically devised property is not owned at death. If property has been sold, there is usually nothing left to exonerate; the specific devise fails unless a statute provides otherwise.

For MBE purposes, exoneration is usually tested in isolation, but being aware of these interactions can help in complicated fact patterns.

Worked Example 1.6

Testator’s will leaves “my condo to C and the rest of my estate to R.” At death, the condo is subject to a $300,000 nonrecourse mortgage (lender’s only remedy is foreclosure against the condo). The jurisdiction still follows the common law exoneration rule. The will is silent about the mortgage.

Is C entitled to exoneration?

Answer:
Under the traditional rule, exoneration ordinarily applied only when the decedent was personally liable on the mortgage debt. Here the mortgage is nonrecourse, so the lender’s only remedy is foreclosure on the condo. Most courts would hold that exoneration does not apply. C takes the condo subject to the nonrecourse mortgage and bears the risk of foreclosure; R’s residuary estate is not charged with paying off the mortgage.

Exam Warning

In anti-exoneration jurisdictions, do not assume that the estate will pay off a mortgage on devised property unless the will clearly directs it. General “pay my debts” clauses are not enough. Most MBE questions now reflect the modern statutory rule.

Revision Tip

Always check the will for express language about payment of debts on devised property. If the will is silent, apply the jurisdiction’s default rule (usually anti-exoneration) and remember that specific devises pass subject to existing mortgages.

Key Point Checklist

This article has covered the following key knowledge points:

Exoneration is the doctrine that a beneficiary may, under traditional rules, have a mortgage or lien on specifically devised property paid from the estate so the property passes free of the encumbrance.
At common law, specific devises of real property subject to a mortgage for which the decedent was personally liable were exonerated from the residuary estate unless the will stated otherwise.
A majority of modern jurisdictions have enacted anti-exoneration statutes (often based on the UPC) under which encumbered property passes to the devisee or heir subject to the mortgage, absent an express exoneration directive in the will.
A general “pay all my debts” clause in a will does not, under modern statutes, require exoneration of mortgages; the will must specifically reference the secured debt or mortgages on devised property.
The doctrine of exoneration traditionally applies only to specific devises of real property, not to general or demonstrative gifts.
Heirs in intestacy, like devisees under a will in anti-exoneration jurisdictions, usually take property subject to existing mortgages and liens.
Real property taxes and similar assessments remain the responsibility of whoever owns the property when they are due and are not typically subject to exoneration.
Understanding the interaction of exoneration with specific/devise classifications, residuary gifts, and estate administration is essential for resolving MBE questions.

Key Terms and Concepts

Exoneration
Encumbrance
Mortgage
Deed of Trust
Personal Representative
Heir
Devisee
Residuary Estate
Residuary Devise
Lien
Anti-Exoneration Statute
Specific Devise
General Devise
Demonstrative Devise
Intestacy

Titles - Exoneration