Selling Real Property when the Owner has Died
Here is a situation: Dad and Mom owned a home. Dad died years ago and Mom stayed living there. In 2009 Mom died. No-one did anything with the Property because it had no equity. But now that the market is recovering, there’s suddenly value… and heirs that want it and are willing to fight over it. So how do you sell this Property?
Here’s a simple 5 step guide:
1. Check the status of Title – Is the Property in a Trust? If so, the Trust should identify a Successor Trustee who could list and sell the Property. However, if not in a Trust then some form of Probate process may be needed depending upon whose names are on title.
2. Is there a Will? – a Will is simply Mom’s instructions to a Probate Judge as to who she wanted to represent her estate after she died and who should get her assets. If there is no Will, then the Probate law will determine her representative and who gets her assets.
3. If Probate is needed, determine the correct process – If the gross value of the Property is $150,000 or less – measured as of the date of Mom’s death – then it is possible to quickly get the title transferred to the legal heirs and then they could sell the Property. If the value is greater, or there are other issues, then a formal Probate will be required. This has several steps:
1) Appointment of Estate Representative (Executor or Administrator);
2) Identifying and valuing Estate Assets;
3) Paying Estate Debts: and ultimately
4) getting an Order distributing what’s left to the Estate Beneficiaries. This process can typically take up to a year and can be expensive.
4. Selling the Property During Probate – a piece of real estate is just a type of Property that has value although, unlike a bank account, it can be much harder to get at that value. Once a Representative is appointed, they may have the authority to immediately List and Sell the Property, ie: convert the asset from real estate to cash. Very often, the real estate is the only asset with value and the only source of funds to pay for the Probate process and other Estate costs. Unless the Beneficiaries want to own the Property, selling during Probate makes sense.
5. When is Court Confirmation Required – Most often, Estate Representatives are appointed with “Full Authority under the Independent Administration of Estates Act”. This means, they can list and sell the Property without Court supervision. Other times however, there may be a dispute over Property value or identification of beneficiaries. At such times, the Court can require that the Property be sold through a Court Confirmation process. Under this process, after the Representative has accepted a Buyer’s offer, the Court will set a hearing date to “confirm” the sale, typically 30-45 days later. During the interim, the accepted price must be marketed. Then, at the hearing, if other prospective Buyers show up, the selling price can be bid up through an auction process. The highest price wins the Property… and the Beneficiaries win too.
For over 20 years, the attorneys of BPE Law Group, P.C. have been advising and representing property owners and real estate licensees in dealing with their legal concerns and maximizing their opportunities. If you have legal questions, give us a call at 916-966-2260 or e-mail me at email@example.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.