Does the existence of debt prevent the deceased's estate from being transferred to the heirs?
General Chapter
Al-Mughni
Book of the Insolvent (Bankruptcy)
Primary text
There are two differing rulings regarding whether debt prevents the transfer of the estate (tarikah) to the heirs immediately upon death. The primary view holds that debt does not prevent transfer. This is supported by a report (khabar) and the reasoning that the attachment of debt to property does not remove ownership for the debtor, mortgagor, or bankrupt person, thus not preventing its transfer. If heirs transact with the estate through sale or other means, their transaction is valid, and they become obligated to pay the debt. If payment becomes impossible, their transaction is voided, analogous to a master selling a slave who committed a crime or selling property subject to Zakat. This ruling seems to follow the principle that the heirs' ownership is established first.
Supporting text
The second ruling states that the transfer of the estate to the heirs is prevented until the debt and bequest are settled. This is based on the Quranic verse stating distribution occurs "after any bequest he [may have] recommended or a debt" (Quran 4:11). Under this view, any transaction by the heirs is invalid because they are dealing with property not yet in their full ownership, unless the creditors grant permission. Conversely, if creditors transact with the property, their transaction is only valid with the heirs' permission.