Learning Outcomes
After reading this article, you will understand the doctrine of exoneration as it applies to titles in real property. You will be able to explain when a devisee or heir is entitled to have encumbrances on devised land paid from the decedent’s estate, recognize the impact of anti-exoneration statutes, and apply these rules to MBE-style questions.
MBE Syllabus
For MBE, you are required to understand the rules governing the exoneration of encumbrances on real property passing by will or intestacy. This includes:
- The traditional doctrine of exoneration and its application to mortgages and liens on devised property.
- The effect of anti-exoneration statutes and modern statutory reforms.
- The rights and obligations of devisees, heirs, and personal representatives regarding encumbered property.
- The distinction between specific and general devises in the context of exoneration.
- The impact of testator intent and will provisions on exoneration.
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) to A, who is responsible for paying off the mortgage?
- The devisee (A)
- The personal representative, from the general estate
- The mortgagee
- The residuary beneficiary
-
Which of the following statements about anti-exoneration statutes is correct?
- They require the estate to pay all debts secured by devised property.
- They abolish the common law rule that mortgages are exonerated from the estate unless the will provides otherwise.
- They allow devisees to demand reimbursement for property taxes.
- They apply only to intestate succession.
-
If a will is silent and the jurisdiction has adopted an anti-exoneration statute, who bears the burden of a mortgage on specifically devised property?
- The estate
- The devisee
- The residuary beneficiary
- The executor
Introduction
When a person dies owning real property subject to a mortgage or other lien, a key question is whether the beneficiary who takes the property is entitled to have the debt paid from the decedent’s general estate. This is the doctrine of exoneration. The answer depends on the terms of the will and the law of the jurisdiction.
Key Term: Exoneration The principle that a beneficiary who receives encumbered property under a will may be entitled to have the debt paid from the decedent’s general estate, so the property passes free of the encumbrance.
The Traditional Rule: Exoneration of Mortgages
At common law, if a testator devised real property subject to a mortgage or other lien, the devisee was entitled to have the debt paid off from the general assets of the estate, unless the will clearly stated otherwise. This meant the property passed to the devisee unencumbered.
Key Term: Devisee A person who receives real property under a will.
Rationale
The traditional rule presumed that a testator did not intend to burden a beneficiary with the decedent’s debts, unless the will expressly provided for it. The personal representative was required to use estate funds to pay off the mortgage or lien.
Application
This rule applied only to debts for which the decedent was personally liable (e.g., a mortgage or deed of trust). It did not apply to encumbrances for which the decedent was not personally liable, such as certain equitable charges.
Modern Approach: Anti-Exoneration Statutes
Most jurisdictions have now enacted anti-exoneration statutes. These statutes reverse the common law rule. Unless the will specifically directs exoneration, the beneficiary takes the property subject to any mortgage or lien, and the estate is not required to pay off the debt.
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.
Policy
The modern rule reflects the view that a testator who does not provide for payment of a mortgage in the will intends the beneficiary to take the property as it is, with any existing encumbrance.
Effect
If the will is silent, the devisee or heir must pay the mortgage or lien to keep the property. The estate’s general assets are not used to pay off the debt unless the will expressly so provides.
Specific vs. General Devises
The doctrine of exoneration traditionally applied only to specific devises—gifts of particular, identified property. General devises (e.g., “$100,000 to B”) were not subject to exoneration of property-specific debts.
Key Term: Specific Devise A gift in a will of a particular, identified item of property.
Key Term: General Devise A gift in a will of money or property not specifically identified.
Testator’s Intent and Will Provisions
A testator can override the default rule (whether common law or statutory) by expressly stating in the will whether the estate should pay off encumbrances on devised property. Clear language is required to direct exoneration.
Example Will Clause
“I direct that all mortgages on property devised by this will be paid from my residuary estate.”
Such a clause would require the estate to pay off the mortgages, even in a jurisdiction with an anti-exoneration statute.
Application to Intestacy
If the decedent dies intestate (without a will), heirs take property subject to any existing mortgages or liens. The estate is not required to pay off the debts unless required by statute.
Effect on Other Encumbrances
The exoneration doctrine and anti-exoneration statutes apply to mortgages, deeds of trust, and similar liens. They do not apply to real property taxes or assessments, which are always the responsibility of the property holder.
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. The will does not mention the mortgage. The jurisdiction has an anti-exoneration statute. Who is responsible for paying the mortgage?
Answer: Sarah takes the house subject to the mortgage. She must pay the mortgage to keep the property. The estate is not required to pay off the mortgage unless the will expressly directs exoneration.
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 personal representative must use estate assets to pay off the $100,000 mortgage. John receives the farm free of 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. Most MBE questions now reflect the modern 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.
Key Point Checklist
This article has covered the following key knowledge points:
- Exoneration is the principle that a beneficiary may be entitled to have a mortgage or lien on devised property paid from the estate.
- At common law, the estate paid off mortgages on specifically devised property unless the will provided otherwise.
- Most jurisdictions now follow anti-exoneration statutes: the beneficiary takes property subject to any mortgage or lien unless the will expressly directs payment from the estate.
- The doctrine applies only to debts for which the decedent was personally liable.
- The testator can override the default rule by clear language in the will.
- In intestacy, heirs take property subject to existing encumbrances.
Key Terms and Concepts
- Exoneration
- Devisee
- Anti-Exoneration Statute
- Specific Devise
- General Devise
