When Can Estate Property Be Sold?

WHEN CAN THE PROPERTY BE LEGALLY SOLD?

We are in the midst of a period of unprecedented demand for the sale and purchase of real estate. Because there are more interested buyers of real estate than there are properties available for sale, some would characterize this as a “seller’s market” (i.e., demand exceeding supply, putting sellers at a perceived advantage).

Consequently, homeowners interested in maximizing proceeds from a potential sale are anxious to place their properties on the market before a turn in market conditions. One such situation arises when a property owner dies, and the heirs of the deceased wish to sell the property.

In this regard, caution must be taken to determine if the property is “ripe” for sale. Said another way, when can the property be legally sold? Putting aside, for purposes of this blog, the motivations of the folks wishing to sell in the event of a death, a determination must be made as to just who is authorized to sell a decedent’s property.

HOW TO DEAL WITH PROPERTY APPRAISER RECORDS?

Agents should be careful, in the sale of estate property, not to rely too heavily on either Property Appraiser records or presumptive next of kin assertions in determining the identity of heirs. In the case of Property Appraiser records, the change in the “owner of record” will not occur until an appropriate legal document is recorded in the Official Records (the specific type of legal document is beyond the scope of this blog). Believe it or not, I have seen Contracts prepared with the recently deceased owner listed as the Seller.

WHO CAN SIGN DOCUMENTS REGARDING THE ESTATE?

Many times next of kin, being aware of the death of a property owner, list “The Estate of John/Jane Doe” as the Seller. This is only half the battle as a determination of who can actually sign documents on behalf of an Estate needs to be made prior to entering into the Contract for the sale of the property. Typically, the Personal Representative of an Estate will be the person (or persons if there is more than one Personal Representative), authorized to sign a Listing Agreement and/or a Contract. If the deceased had a Will, the Personal Representative is often identified there, however, let’s not put the cart before the horse. A person identified in a Will as a Personal Representative is only the “nominated” Personal Representative until approved and appointed by the Probate Court. Similarly, if there is no Will, the Probate Court will need to appoint a Personal Representative.

Here is the crux of this blog – unless and until a Probate Proceeding has been filed and opened, and a Personal Representative is appointed by the Probate Court, there is no person authorized to sign legal documents on behalf of an Estate. Accordingly, if in the haste to get the property to market and under contract the parties skip the indispensable step of commencing Probate Proceedings, such contracts are not properly and legally executed. A contract signed by a presumed heir or a nominated Personal Representative prior to being appointed by the Court, is not enforceable.

Once a party (either the buyer or the seller) learns that a contract was not properly and legally executed, one or the other may attempt to get out of the deal (perhaps a buyer comes down with a case of buyer’s remorse, or a seller learns that someone else is willing to pay more) and the deal is susceptible to unraveling.

CRITICAL LAST STEPS BEFORE YOU SIGN!

So, whenever you see that a property is being sold due to a recent death, or that a property is “in an Estate”, be proactive and ask for evidence that the purported seller has actual authority to sign a contract. The “evidence” would come in the form of a one page document from the Probate Court entitled “Order Appointing Personal Representative” or “Letters of Administration” and it is one of the first things done in a probate proceeding. Obtaining this document is critical because, until a Personal Representative is appointed, nothing can be done with any of the decedent’s property.

Should you have any questions or concerns with regard to the authority of a seller to sign contracts we urge you to Contact or consult with your local real estate attorney for additional guidance.

Sincerely,

Mark Hanewich, Esq. mhanewich@berlinpatten.com

Berlin Patten Ebling, PLLC

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.