) When any property of an estate is sold which is subject to a mortgage or other lien which is a valid claim against the estate, and which has been allowed, the purchase money must be applied, after paying the necessary expenses of the sale, as follows: first, to the payment and satisfaction of the mortgage or other lien; and then the residue, if any, in due course of administration. The application of the purchase money to the satisfaction of the mortgage or other lien must be made without delay; and except as provided in subsection (b) of this Section the property sold is subject to such mortgage or other lien until the purchase money has actually been so applied.

(b) When any property of an estate is sold which is subject to a mortgage or other lien which is a valid claim against the estate, the purchase money, or so much thereof as may be sufficient to pay such mortgage or lien, may be paid to the Clerk of the Superior Court, where- upon the mortgage or other lien upon such property shall cease; and the purchase money shall be paid over by the Clerk of the Superior Court of

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CH. 23 PERSONAL REPRESENTATIVE’S DEALINGS WITH ESTATE PROPERTY

Guam without delay, in payment of the expenses of sale, and in satisfaction of the obligation to secure which the mortgage or other lien was taken, and the surplus, if any, at once returned to the personal representative, unless for good cause shown, and after notice to the personal representative, the Superior Court otherwise directs.
(c) At any sale of any property of an estate upon which there is a mortgage or other lien, the holder thereof may become the purchaser, even though no claim thereon has been, or could have been, presented or allowed. If no claim thereon has been presented or allowed, the Superior Court may at the hearing on the confirmation of such sale examine the validity and enforceability of the lien or charge and the amount due thereunder and secured thereby, and may authorize the personal representative to accept his receipt for the amount due thereunder and secured thereby as payment pro tanto. If such mortgage or other lien is a valid claim against the estate and has been allowed, the receipt of such purchaser for the amount due to such purchaser from the proceeds of the sale is a payment pro tanto. If the amount for which such property is purchased, whether or not such claim was presented and allowed, is insufficient to defray the expenses and discharge the purchaser’s mortgage or other lien, the purchaser must pay the Clerk of the Superior Court an amount sufficient to pay such expenses. Nothing permitted under the provisions of this subsection shall be deemed to be an allowance of a claim based upon such mortgage or other lien.

SOURCE: Subsection (a): California Probate Code, § 762. Subsection (b): Id., § 763. Subsection (c): Id., § 764 (as amended).

COMMENT: Section 2327 brings together all necessary provisions concerning the sale of encumbered property. Similar provisions existed in §§ 789, 790 and 791 of the Probate Code of Guam (1970); the Commission, however, is of the opinion that these matters should be brought together and clarified by one statute which covers all sales of encumbered estate property, rather than only sales of real property as was the case under prior law.