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How to Sell a Property During Probate in 7 Steps

Written by Posted On Monday, 23 July 2018 12:49

The world of probate can be complex and confusing to someone who has never had to deal with it. This article is intended for Realtors looking to sell a property that is currently in probate or will be passing through probate. Below are seven steps that will provide you, the Realtor, with a good foundation on how to sell a property in probate.

Step 1 – Find a Qualified Probate Attorney

If the probate process has already begun, a probate attorney may already be involved. However, if you know that a property must go through probate in order to be sold and you have not started the probate process, your first step is finding a probate attorney. Not all attorneys are the same and not all attorneys focus on probate. Just as you would not go to your family physician for open heart surgery, you would not go to just any attorney for a probate matter. Find an attorney who specializes in probate. Some attorneys claim to be probate attorneys, but they are actually estate planning attorneys. Estate planning attorneys focus on drafting wills, trusts, and other documents while the person is alive. Probate attorneys, however, focus on the actual probate process and deal with legal issues after death, not before.

Step 2 – Find a Realtor who is a Certified Probate Real Estate Specialist (CPRES)

Not all Realtors are the same. Some specialize in commercial properties and some in residential. Many Realtors are not familiar with selling a property in probate. It is a unique process, and if you are looking to list a property in probate for a client and are not familiar with probate, look to partner up with a Realtor who has their CPRES real estate designation. The CPRES designation ensures that the Realtor you are dealing with has both education and experience in dealing with estate settlement. If you see that probate is a good niche for you, you may want to consider getting the CPRES real estate designation yourself.

Step 3 – Appoint a Personal Representative

The first step after the probate has been opened with the court is to have a personal representative (some states use the term executor) appointed to represent the estate. The personal representative is either the person nominated in the deceased’s last will and testament or the closest relative. The personal representative is the person who will work with the attorney and Realtor to sign any legal documents on behalf of the estate. This person will also be the one signing the contract to sell the property.

Step 4 – Appraise the Property

This is nothing new. Everyone dealing in real estate knows that the property needs to be appraised. However, the difference in probate is that this appraisal will likely be filed with the probate court. It is important that an independent third party appraise the property. Here is why: let’s say that there are two beneficiaries who stand to inherit the proceeds of the sale, and one of the beneficiaries is the personal representative. He or she, through their Realtor’s brokerage, chooses an appraiser to go out to the property. This appraiser appraises the property at $500,000, and the Realtor quickly gets a contract for that amount. Well, the other beneficiary believes the property is worth $1,000,000. Now, this beneficiary is upset and could contest the sale of the property in the probate court. The probate judge may side with the other beneficiary if the judge believes this appraiser had a personal interest in appraising the property at the lower price. For this reason, you need to consult with your probate attorney to make sure the appraisal is done correctly.

Step 5 – Place the Property for Sale • Get a Contract • AND Put Contingency Language

Placing the property for sale and getting a contract is pretty standard. The CPRES Realtor assumedly knows how to market and sell your property. However, the contract needs very specific language. For example, the contract should specify that the seller will be the personal representative: “John Smith, as Personal Representative of the Estate of Richard Smith.” The contract should state the conveyance will be by a personal representative’s deed as opposed to a general warranty deed. However, the main thing is to put contingency language in the contract that lets the buyer know that the contract is contingent upon the probate court approving the sale (see the next step). Without this contingency language, the seller could run into some issues; i.e., breach of contract. I would advise you to have your probate attorney, or your real estate attorney, review the contract prior to the seller signing any contract. Many sellers are in such a hurry to sell the property that they skip this step, and it ends up costing them thousands of dollars. Long story short – send any contract to your probate attorney before you sign it.

Step 6 – Get the Sale Approved by the Probate Court

So, you have a contract and a cash buyer lined up. Fantastic. This contract and sale now has to be approved by the judge overseeing the probate case. This is where a good probate attorney is worth their weight in gold. It is safe to say that no matter where you are, the probate system in your state and county is not known for moving quickly. Sadly, the wheels of justice move rather slowly. Therefore, if your probate is attorney is not proactive in calling the judge’s assistant, scheduling hearings, sending letters and being borderlines obnoxious in getting the contract approved, it is possible that contract and the attorney’s petition to approve the sale, will just sit on the judge’s desk for weeks, if not months. And while you should be leery of any attorney who says they can get you the probate done in one week or less, you should ask the attorney what he or she intends to do to make sure the contract is approved as quickly as possible.

Step 7 – Get the Seller Their Money

Unlike a normal sale, the proceeds of the sale of a property in probate are not going to be given to the seller, or in this case the personal representative, at the closing table. The money from the sale of a property in probate is going to be deposited into a bank account, which was opened by the probate attorney and personal representative. That money will be used to pay any of the decedent’s creditors, possibly the probate attorney and other costs/fees used to administer the estate. After everyone has been paid and all of the assets of the estate have been sold or liquidated, the probate attorney will petition the court to distribute the funds to the personal representative and other beneficiaries. Again, a probate attorney focused on efficiency and expediency will help everyone get their money sooner than later.

Final Thoughts

There are certainly other factors to consider when selling a property in probate, but this should give you some good ideas and things to pay attention to if you happen to be looking to sell a property in probate. As you can see, there are certain nuances and subtle differences when selling a property in probate and it is very important that you consult with professionals who have dealt in this field before. Educate yourself and bring in help if necessary. Just because I could probably figure out how to change AC unit in my home, doesn’t mean I should. (Trust me, I should not try to do this).

Good luck and if you need any guidance, feel free to call us at 305-456-3255, send us an email at This email address is being protected from spambots. You need JavaScript enabled to view it. or visit us on the web at www.jbstiverslaw.com.

Thank you and have a great day!
 
Justin Stivers
Probate Attorney
Miami, Florida
p. (305) 456-3255
www.jbstiverslaw.com
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