Personal Representatives or heirs are often anxious to sell the real property due to the expense of holding the property if it’s vacant. Here’s what you need to know before signing a listing agreement or liquidating that real estate.
If the Will gives the Personal Representative the power to sell the property of the estate, the P.R. can simply market and sell the property on behalf of the estate. This is a standard power granted in most documents and should be easy to identify. When selling the property, the P.R. should simply make sure they are entering into an arm's length’s transaction and acting in the best interest of the estate. For example, if the P.R. wished to purchase the property, it would be prudent to contact an attorney so as not to be accused of self-dealing. The P.R. should also take caution to make sure they are getting the fair market value for the property through the use of a CMA (cost market analysis) or appraisal or the employment of a qualified real estate agent.
If the decedent died without a Will (intestate) or the Will does not give the P.R. the power to sell property, then the Court’s permission must be obtained prior to seeing the property. Seeking Court permission to sell real estate involves filing a Petition which will inform the Court about the property the P.R. is seeking to sell, provide its estimated value, and explain the reason the P.R. desires to sell the property. The Personal Representative will also need to provide the Court with a copy of the deed and documentation to support the estimated value. A hearing will be set and all parties interested in the estate will be required to be given the notice to attend. After a hearing, the Court will decide whether or not the P.R has permission to market the property.
If granted, the Probate Court will authorize the property to be marketed for sale on the terms set by the Court. An Order detailing the terms will be issued which should be provided to any professionals involved in the process (agents, closing attorneys, etc.) The P.R. can then accept an offer on the property for at least the minimum sale price approved by the Court.
If you are unsure if you have the power to sell, wish to sell to a party (including yourself) who has an interest in the estate, or need to file a Petition to approve a sale it’s wise to contact an attorney to handle these issues for you. Many of them will hold their expenses and can be paid from the proceeds of the sale in estates where there is no cash to cover these expenses.
Lastly, please remember that this post does not apply to property held jointly with rights of survivorship as explained in our previous posts as upon death that property belongs to the remaining owners and is no longer an asset of the estate.