THE JERUSALEM INSTITUTE OF JEWISH LAW 
Rabbi Emanuel Quint, Dean 

Lesson # 86 • When heirs must pay the debt of the decedent

As soon as a loan is made whether oral or evidenced by a note of indebtedness, it subjects all of the assets of the borrower whether real property or personal property to be used to pay the loan.

It places a lien (shiabud) on all the assets, real estate or personal property, owned by the borrower at the time of the loan. In the hands of the debtor, or of the debtor's purchasers or his heirs, all of his assets, real property or personal property, can be levied upon by the creditor either because he has acquired them or because they stand as security for the loan. There is a difference of opinion on what the word shiabud denotes. According to one view it means "sold." that is, that the borrower has in essence transferred or sold all of his assets to the lender and they will be returned to him upon his repaying the loan. The other authorities hold that the term shiabud means security, that is, the borrower's property stands as security for the loan and is liened to the lender. He has no title to the assets of the borrower, but his lien permits them to be traced to the purchaser from the borrower or to the borrower's heirs.

Thus according to Torah law, whether the loan is oral or evidenced by a note of indebtedness, all of the assets, real property or personal property, can be traced to a purchaser or to an heir to recover the debt from the purchaser or the heir if the debtor does not have sufficient assets to pay the debt. 

A Rabbinic decree (There may have been two separate decrees or one decree) modifies Torah law regarding purchasers of the assets of the debtor and the inheritors of the assets of the debtor. 

(1) If the loan is oral, all liens are removed by the purchase or death. The liens were removed in the hands of a purchaser so that commerce could continue unimpeded. If a person who desired to purchase anything could have the purchased item lost to a creditor of the seller, then the purchaser would be reluctant to purchase the item, whether unliened real estate or personal property. For example, if a customer entered into a food market to purchase bread or milk, he would be fearful whether a creditor of the food merchant had a lien against his food. The lender, by not insisting that a note of indebtedness be written, caused his own loss regarding real estate.

(2) If the loan is evidenced by a note of indebtedness, it does not serve as a lien on the personal property of the debtor purchased from him or inherited from him by the heirs of the debtor.

(3) If the loan is evidenced by a note of indebtedness, it remains as a lien only on the real property that the purchaser had purchased from the borrower. Since the loan is evidenced by a note of indebtedness, its existence is presumed to be known by all, including potential purchasers of the real estate. Thus when a purchaser of the real estate does so with knowledge that there was a lien on the real estate, he places himself in jeopardy by purchasing the real estate.

If the Rabbinic decree cancelled all liens, including those against the real estate purchased from the debtor, then lenders would be reluctant to grant loans since they would leave themselves vulnerable to having the debtor sell off all his assets. Real estate is usually relied upon by the lender rather than personal property, since he knows personal property can be hidden away.

The Geonim, after the close of the Talmud, decreed that inherited assets may be levied upon by the creditor while in the hands of the heirs. For if the creditor could not trace the assets to the heirs, there would be reluctance to extend credit, for only God knows when a debtor might die. 

According to Torah law, the obligation to pay the debt of the heirs' father is limited to inherited property, whether real property or personal property.
There is a legal obligation on the heirs to pay the debt of their father to the extent of their inheritance. They are compelled to do so just as their father would have been, since for the purpose of the debt they are deemed to stand in his place. At the current time the legal obligation to pay their father's debt is limited to the real estate, the money, and the personal property they inherited from him. The heirs may be sued in Beth Din to comply with this obligation. This holds true under certain conditions even if the loan was an oral loan; this holds true even if the debtor acquired the devised assets after the making of the loan, and the note or terms of the loan did not include the obligation to pay from after-acquired assets. Notes of indebtedness that the father held against his debtors are included in the assets of the father.

If the instrument the creditor holds against the father does not specify that the debt will be paid from real property or personal property, and the heirs inherit both real estate and personal property, and the creditor wishes to paid from one kind of property and they wish to pay from the other, the desire of the heirs will generally be followed. 

If the heirs do not inherit anything from the father, they are under no obligation to pay the debt of their father. If they inherit less the amount of the debt, they need pay off the father's debt only to the extent of the inheritance. There is not even a moral obligation to pay the debt of their father if they did not inherit anything from him. Similarly, there is no obligation o pay the debt beyond the amount they inherited from their father, since there is no commandment to honor one’s parent by paying his debt. If the father made gifts to the heirs in contemplation of his death, these are considered as if they were inherited by the heirs for the purposes their obligation to pay the father's creditor.

The obligation of the father to the creditor is $200. The father dies leaving realty valued at $120. The creditor levies on the real estate and receives the real estate in reduction of $120 from the debt. The heirs the pay the creditor $120 and take back the field. The creditor cannot levy on the field to recover the remaining $80, nor can it be levied upon by creditors subsequent to the creditor who made the levy.

The books of the father stated that he owed money to the creditor. The heirs are obligated to pay this debt if the time payment is not yet due. 
The heirs allege that the father did not devise them any assets and therefore they have no obligation to the creditor to pay their father's debt, and the creditor pleads that he is certain that they did inherit assets from their father. The heirs take a hesseth oath and they have no obligation to the creditor.

If the creditor hears of the death of the debtor and knows that he has very little assets to leave to the heirs, and the heirs if they spend the assets on the burial will not be able to pay the debt from the inherited assets, the creditor may obtain a restraining order to preclude the heirs from using the assets to pay for the burial. This right does not exist if the creditor is a relative of the decedent debtor and would be obligated to pay for the burial if the debtor left no assets.

The subject matter of this lesson is more fully discussed in Vol. IV, Ch.111 of A Restatement of Rabbinic Civil Law by E. Quint, published by Jason Aronson, Inc. and on sale at local Judaica bookstores. 
Questions to quint@inter.net.il