Buying and Selling a House in Probate

Buying and Selling a House in Probate

By Dori Zinn

Buying or selling a house in probate is different from a traditional real estate transaction. Find out what you should know to try and avoid making costly mistakes.

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Buying or selling a home is already an overwhelming task for many people. Shopping around, listing a home, visiting open houses and signing paperwork aren’t exactly anyone’s idea of fun. It’s also expensive. But buying and selling a home in probate can be even more complicated, especially since courts are involved. Here’s what the term “probate real estate” means and how you need to handle a house in probate.

Probate and real estate: the basics

When someone dies, their assets and belongings go through a court process called probate. Probate carries out a deceased person’s wishes as detailed in their will or if there’s no will, probate follows state law.

“Managing real estate in probate is different from traditional real estate transactions because the personal representative must maintain the property and pay bills associated with the home,” said Jennifer L. Fox, a Florida-based attorney with Bresky Law, a firm that specializes in estate planning. “If the real estate is in the decedent’s individual name without joint tenancy, transfer on death deed or in trust, then it will go into probate.”

Jennifer Fulton, also an attorney with Bresky Law, said more parties might need to approve the sale before it goes through.

“If the power to sell real property is not included in the will (or if there is no will), court approval will be required to sell the real property,” Fulton said. “In some cases, such as when the sale of real property is to pay the expenses of the administration, in Florida, a personal representative may want to seek court approval to sell real [estate] property even with express authority to sell under the will.”

There are many differences between handling a home in probate compared to a traditional house. “If there isn’t a will, the probate court may require that they approve any possible sale and that the sale must be for a minimum value,” said Geoffrey Kunkler, a partner at Carlile Patchen & Murphy LLP in Columbus, Ohio. “If there is a will, many states will still require the beneficiaries of the estate consent to the sale of the property.”

While having a will can help the probate process move faster, it doesn’t necessarily avoid probate. Every state has different requirements when it comes to probate law.

Selling a house in probate

If you’re thinking about selling a home that’s currently in probate, you might run into some issues and setbacks, depending on the home and conditions of the probate court’s requirements.

“It may take longer because the beneficiaries may need to consent to the listing price and sale price,” Fox said. “Also, the court may require an order authorizing the sale of the property if the creditor’s period has not expired.”

If you’re selling a home that isn’t your primary residence, you may not be able to answer specific questions about the home that potential buyers may have. For instance, do you know when the roof was installed or how old the appliances are? If you don’t have answers about what’s been done on the home, you might turn away potential buyers. Even if a real estate agent isn’t required, you may want to enlist the help of one anyway.

“It’s advisable to consider working with a [real estate agent] when selling a property in probate,” Kunkler said. “It may also be required to get a formal appraisal done for the property, [and] many states will require you to work with an attorney when dealing with probate unless you get the explicit permission of the probate court to proceed without [one].”

Know Your Home Value Now

Buying a house in probate

If you’re thinking about buying a home in probate, you might face a significant hurdle—time.

“Probate can possibly slow down the timing as there may be required consents from the decedent’s beneficiaries or approval that could be required by the probate court,” Kunkler said. “Most states have laws requiring certain disclosures of possible known defects when buying a home and those requirements are often waived when the house is owned by an estate.”

If the seller isn’t someone who’s lived in the home, you might not get a full idea of what’s going on with it. Many potential buyers use a home’s history in the negotiation process. If you don’t have access to disclosures of the home’s defects, you could be buying a home with a host of issues that you know nothing about.

Common mistakes in a probate house sale

A probate house sale is a completely different type of sale compared to a regular home sale. If you aren’t careful, you could make some major mistakes both as a buyer and a seller.

Rushing the process

The experts we spoke to all mention that the process can take much longer than a normal home sale due to the extra hurdles that might be required from probate court.

“People often proceed as if it is a typical sale and don’t get the necessary professionals and authorizations lined up,” Kunkler said. “This causes frustration when a buyer is ready to purchase the property.”

Not hiring experts to help

Remember that probate goes through a court process and if you don’t have the right team, you might cause undue stress for everyone involved.

A probate attorney is one of the most important people to have on your side. Along with that, you’ll need a real estate agent with experience in your state’s probate laws and procedures. Rather than consider one or the other, you should probably have both.

Not maintaining upkeep on the home

If you didn’t live in the home yourself and you’re not staying there during the probate process, you might be missing some big-picture issues.

For instance, appliances might stop working, pipes could burst or the foundation could crack and you wouldn’t be there to see it. If the yard hasn’t been mowed for many weeks or the home hasn’t been cleaned in months, you might lose buyers to properties that are in better shape.

Keep up with the regular maintenance and follow probate requirements to ensure the home can get sold as soon as possible to avoid having an empty home for longer than necessary.

Conclusion

A probate home is not a regular home sale —for buyers and sellers alike. If you’re considering buying a home in probate, it’s important to realize that this purchase won’t be quick. Along with that, you’ll need to go over every inch of the home—inside and out—as thoroughly as possible. The seller might not know everything that’s wrong with the home and you could buy property that has a lot of issues. Do your due diligence sooner rather than later.

If you’re selling a home, this might become your temporary full-time job. Try to follow every requirement of the probate court, hire the most experienced team and keep up with regular home maintenance. The process won’t go quickly, but you can take steps to ensure it goes as smoothly as possible given your circumstances.

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.