When you’re grieving the loss of a loved one, the last thing you want to do is sort through the complex details of their assets – especially real property. But knowing more about what happens to real property after death can help avoid unwarranted surprises. There are many factors that play a role in how real property is transferred, like whether or not the deceased person had a will, or if the property is part of a trust or co-owned with others. In some instances, a probate proceeding may be required to ensure an orderly transfer of the decedent’s assets – including real property. Let’s explore when and how the title to real property is transferred during a probate proceeding.
What is probate?
Probate is the formal legal process of ensuring the validity of a person’s will, reviewing their assets and finalizing the executor of the estate, or the person responsible for distributing assets to beneficiaries and heirs as described in the will. Typically, this person is a close remaining relative. If the deceased individual (or decedent) did not have a will, the death is considered what is referred to as intestate. In this circumstance, the court uses state-specific probate and intestate succession laws to make fair and just determinations about the assets and assigns an administrator or personal representative to administer the estate.
How does probate work?
Although the probate process varies by state, there are some routine steps in every jurisdiction. Below is a simplified version of each:
1. File a petition. A petition for probate must be filed with the court in the jurisdiction where the decedent lived at the time of death by the individual who intends to act on behalf of the decedent. Once filed, the court will schedule a hearing to appoint the executor or name an administrator.
2. Give notice. Notice must be given to all parties who may hold an interest in the decedent’s estate, such as heirs and beneficiaries named in the will. The executor or administrator holds the responsibility of giving notice, which must be sent by mail or process service. Notice must also be provided to potential creditors. This is usually accomplished by publication in a newspaper with a wide circulation and must be published for several days or weeks, depending on state requirements.
3. Inventory and appraisal of all assets. Once the probate case has been opened, the next step is to determine the list of the decedent’s assets and respective value, then present them to the court. This is particularly important when it comes to real property, which will need to be appraised before it is put on the market, if a sale of the property is required.
4. Transfer remaining assets and close the estate. Once all claims, debts and expenses are paid; real property has been legally transferred to appropriate heirs or sold; and funds disbursed to beneficiaries, all records and receipts are submitted to the court with a petition to close probate. Once the court examines the records, and if there are no objections, then an order to close the estate will be filed by the court.
What happens when real property is sold through probate?
The executor or administrator of the estate is generally tasked with administering the sale of real property. The court controls the process of the sale, including how the property is marketed, which offer is accepted and negotiations that are made. There are some unique nuances to probate sales, which may include, but are not limited to, the following:
- Real property is often sold at a price relatively lower than average, with minimum overbid requirements in some states.
- The buyer may be asked to remit a deposit (10 percent of the sale price) when making an offer.
- Property is generally sold “as-is.”
- The closing process can take longer than a traditional sale.
Once the court approves the sale and a buyer has submitted an offer and deposit, the closing process can begin. In order to facilitate the closing, the Escrow Officer or Closing Agent may request copies of documents filed in probate court, which can include, but are not limited to: A Letter of Testamentary that confirms the individual has been granted authority to conduct matters on behalf of the estate; a certified copy of the death certificate recorded in the county where the decedent lived; and a copy of a filed disclaimer of interest from any beneficiary who rejects their rights to the property.
Is probate always required to transfer real property after death?
No, not all real property is subject to probate. There are certain circumstances where probate can be avoided when transferring real property after death, such as if title to the decedent’s real property was held in a trust; if it was jointly owned with a co-owner who had rights of survivorship; or if the property was shared with a spouse or domestic partner in a community property state, regardless if the spouse or domestic partner was on title.
How long does it take to transfer real property in probate?
A probate case should take less than a year but can extend to several years if there are unforeseen circumstances, such as a challenge to the validity of the will, a complicated list of assets, or an inability to locate beneficiaries. Also, when dealing with real property, title issues such as improper recordings after a divorce or an incorrect legal description in the court order can cause further delays.
Probate proceedings can be complex. Taking the time to discuss the process with an attorney and to understand the steps and court requirements can help provide insight and lessen overwhelming feelings about the process. At Old Republic Title, we’ll work with you to make sure your property rights are protected for years to come. For more helpful resources about title insurance and settlement services, contact an Old Republic Title representative today.
Copyright Old Title – Reprinted from https://www.oldrepublictitle.com/blog/probate-and-real-property-transfers/
This material is for educational purposes only and does not constitute legal advice. Old Republic Title strongly recommends that consumers obtain guidance and advice from qualified professionals, including attorneys specializing in real property law, probate law, or tax law to get more detailed and current information as to their particular situation.