Many decedents’ estates contain assets in the form of real estate. A decedent may have owned a home or rental property or a commercial building containing a business. Such items are typically the most valuable items among the decedents’ assets.
If a decedent left a Last Will, such document may provide for the disposition of a specific parcel of real estate to a named person. When the Will does not contain such a provision or when a decedent dies intestate without a Will, the real property is part of the general estate. In most of these situations, the property is typically sold to provide for the payment of estate obligations such as an outstanding mortgage or the disposition of funds to a number of estate beneficiaries. The New York Probate Lawyer Blog contains many articles concerning estate administration.
The sale and closing of real estate by an executor or administrator is usually comparable to the process when a sales transaction is entered into among living individuals. However, there are a number of important aspects regarding estate closings that should be taken into consideration. Here are a few important items:
The purchaser and title companies will want to receive updated letters of appointment such as Letters Testamentary and Letters of Administration. This assures the purchaser that the seller – fiduciary has authority to sell the property. In this regard, the fiduciary must check the letters that were initially issued to see if there were any limitations imposed by the Court on the fiduciary authority.
The letters may reflect that the fiduciary only has authority to collect assets up to a certain value. If the sales price of the property along with other estate assets exceeds this stated amount, the administrator or executor will need to apply to the Court to allow for amended letters with increased authority.
Also, the letters may indicate that the fiduciary is prohibited from transferring or selling the property without Court approval or the posting of a surety bond. In such a case, an application must be made to the Court for authorization and the setting of the bond amount. These proceedings may delay a closing for many months. The fiduciary should be aware as to whether his credit rating and financial profile can qualify for the issuance of a bond.
Another important aspect of estate sales is that the fiduciary is generally not familiar with the property being sold. Many times there are liens for judgments or building violations which are not apparent until a title search occurs. While the decedent may have been aware of these problems, the fiduciary may have no way of discovering these issues until a closing is about to occur. Sometimes, it may be a good idea for a fiduciary to perform a simple title search before entering into a contract so that these matters may be cured beforehand.
The fiduciary should be aware that any property sale will be subject to review at the time the estate is ready for settlement. The estate settlement process requires that the executor or administrator provide beneficiaries with an accounting. The beneficiaries may feel that the sales price or selling expenses are improper and object to certain aspects of the transaction. It is always important to obtain a certified property appraisal to provide verification that the sales price for the property was fair and reasonable. This helps to avoid objections by estate beneficiaries who thought they should be receiving more benefits than are available.
I have represented many clients in real estate closings throughout New York City and the metropolitan area. There are many aspects to estate closings that can be complex and delay estate settlement or can lead to estate litigation. Call Me Now for a free confidential review of your real estate issue. We provide reasonable and flexible fee arrangements and personal representation.
New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.