This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
On the death of a tenant in fee simple any person who takes any beneficial interest in the land, either under a will or as heir, takes it subject to the debts of the tenant, until they have all been paid.
The personal representatives ought to pay the debts out of the personal property first, but a creditor is not bound by this rule and can claim against any of the property of the deceased tenant.
This rule does not apply to an estate tail, for on the death of a tenant in tail, the land descends to the next person entitled under the entail, free from the debts of the first tenant.
If the tenant in tail or his trustee in bankruptcy had barred the entail during his life, he would of course no longer be a tenant in tail but a tenant in fee simple, and the land would be subject to his debts.
On the death of a tenant for life, his estate ceases, and the land is not subject to his debts.
The rule applies to leaseholds (which, being personal property, have always been subject to the
(q) 56 & 57 Vict. c. 21, s. 2.
debts of the tenant), and to all lands over which the deceased had a general power of appointment which he has exercised by his will.
Land over which the deceased exercised a general power of appointment is the last fund resorted to for the payment of the debts of a deceased.
History of the rule that the lands of a tenant in fee simple are subject to his debts on his death (r) -
(i.) At Common Law. - The land descended to the heir, but he was bound to pay the debts (to the extent of the value of the land) if the chattels were not sufficient.
(ii.) By a later rule created by the feudal system, the heir was only bound by debts which were contracted under seed, which were called "specialty debts," All other debts were called "simple contract debts," and were not binding on the heir.
(iii.) Equity. - The common law courts always disregard wills of land, consequently they were administered and carried into effect by the Court of Chancery. If, therefore, the tenant in fee simple devised his kinds by will to trustees to pey his debts, Chancery carried out this trust. The principle of the Court of Chancery in these cases was that "equality is equity," and, therefore, all the debts were paid equally, i.e. "specialty" and "simple contract debts" were paid proportionately (pari passu) out of the land. Land thus devised was called "Equitable Assets."
(iv.) By an Act of 1801 (s), the lands of traders could be taken to pay any of their debts.
(v.) By an Act of 1833 (t), this was extended
(r) For a full statement of this history of the rule see "Williams or Real Property," p. 273. (s) 47 Geo. III. c. 74. (t) 3 & 4 Will. IV. c. 104.
to all persons whether traders or not: but under these Acts "specialty debts" were paid first, unless the land had been devised to trustees and made "equitable assets."
(vi.) By Hinde Palmer's Act, 1869, s. 1, "specialty" and "simple contract debts" were put on the same footing. They are now paid pari passu, and there is no difference for the purpose of administration between the two kinds of debts (u).
The text of this section is set out on p. 310.
This applies to cases where the tenant died on or after the 1st January, 1870 (x).
Thus the heir or devisee became bound to see that provision was made for all the debts of the deceased, before he could claim the land free from the debts. The position was very inconvenient, for the proper person to pay the debts was the personal representative; but he had no power to sell the lands, unless such power was expressly given him by will.
(vii.) By the Land Transfer Act, 1897 (y), the personal representative has power to sell the fee simple lands for the purpose of paying any of the debts of the deceased tenant. This Act applies where the tenant dies after the 1st of January, 1898.
(u) Note on second reading. - Even the supposed distinction with reference to the executor's right of retainer seems to be shaken by the decision in re Samson,  2 Ch. 584.
(x) 32 & 33 Vict. c. 46.
(y) 60 & 61 Vict. c. 65.