Q: How does it work if I die and leave my house to my daughter and it is not paid for?
A: Liens (mortgages) are not extinguished by the death of an owner. Any open liens (mortgages) stay legally attached to the property. So if you leave your home to a child, and at the time of your death there is a $150,000 mortgage, your child inherits the property "Subject To" the mortgage. Your child has no financial responsibility to repay or make payments to the lender, however if the mortgage is not paid and goes into default, the lender can foreclose the mortgage and take possession and ownership of the home.
A:
She gets the not paid for house.
Once they are paid in full, they will file a release of mortgage and she will own it free and clear.
Of course, she can sell it and pay off the mortgage anytime.
She can also refinance it and pay them off.
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