I See Dead People (On Title)!

There are endless reasons for property owners to make the decision to sell their property. Unfortunately, one of the most common motivating factors is the passing away of an owner of the property. On top of everything that goes along with the death of a loved one, the last thing a Seller needs or wants are complications when attempting to sell their property caused by their loved one’s passing. However, in order to convey clear and marketable title to a buyer, as a Seller is required to do, a Closing Agent must be able to insure that no other person(s) besides the person signing the deed has a claim of an ownership interest in the property.

While it may be plainly obvious to all involved that an owner has passed away, and thus cannot convey their interest in the property, proper documentation must be recorded in the public records in order to perfect title and convey clear and marketable title. A common scenario often presents itself when a Realtor expects to meet two owners for a listing appointment – because the property records list a husband and wife as owners – only to find out that one of the owners has passed away. By knowing what issues need to be addressed in this and similar situations and how to address these issues for Sellers, Realtors can provide Sellers with some peace of mind during a time when they do not need further complications. The following points can be used as a guide when Realtors find themselves in a similar situation:

1. Who is required to sign documents? As anyone who has sold a property before can tell you, Sellers will be required to sign many documents by the time their property is ultimately sold. The listing agreement, contract, and closing documents are common examples of important legal documents that will need to be executed correctly by a Seller. So who is required to sign when one of the Owners listed on title has passed away? Unfortunately, the answer to this question is everyone’s least favorite attorney answer: it depends. Fortunately, the answer can typically be found by examining the prior or “vesting” deed, which vested title in the current owners’ names. For example, if title is held by a “Husband and Wife as tenants by the entirety” and one spouse passes away, only the surviving spouse needs to sign. As another example, if title to the property is held in a trust, the Trustee of the Trust would be required to sign. However, title can be held in many different ways; thus, a careful review by a trusted real estate attorney is strongly advised. And it should be noted that death events and probate (or the lack of probate) occurring prior to the vesting deed could require additional documents and authorizations for signatures from prior title holders or their beneficiaries. This can only be determine by a complete title search and review.

2. What documents are necessary? While simply examining the vesting deed may tell us who is required to sign, additional documentation may be necessary in order to provide the Buyer with clear and marketable title. For instance, if one Owner passes away, a certified death certificate will need to be recorded in the county where the property is located in order for the public record to reflect that one owner has passed away, leaving title in the proper surviving Owner’s name only. In the case of a property being titled in a trust or an entity like an LLC, the trust document or the entity’s operating agreement will provide instructions as to exactly who is authorized to sign on behalf of the trust or entity in different situations. Thus, gathering these documents at the outset will help avoid delays and complications throughout the closing process, and help avoid the unenviable situation where it is discovered well into the closing process that the person signing on behalf of the property Owner(s) is not authorized to do so.

3. Additional considerations. When the last person listed on title to the property passes away, oftentimes their estate planning documents address who is authorized to convey their property, who their property is to be conveyed to, and how their property is to be conveyed. However, while it might seem obvious to the person named in the decedent’s estate planning documents that they were given authority to convey the estate’s property, it is often far more complicated than they realize, and the property may need to go through probate proceedings prior to being sold. This is why it is important to obtain any available estate planning documents (e.g. wills and trusts) for review prior to assuming that the person representing the estate actually has the authority to sign the documents mentioned above and ultimately convey the property.

While a recent death certainly results in many stresses and complications, selling a property does not need to be one of them if these simple guidelines are kept in mind. If you have questions regarding how to best prepare to sell a property after an Owner passes away, we encourage you to contact a trusted local real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Andrew Conaboy, Esq., aconaboy@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

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