{"id":292,"date":"2019-03-22T08:40:54","date_gmt":"2019-03-22T15:40:54","guid":{"rendered":"https:\/\/www.jacksonwhitelaw.com\/probate\/?p=292"},"modified":"2024-07-31T10:28:46","modified_gmt":"2024-07-31T17:28:46","slug":"can-you-sell-house-before-probate","status":"publish","type":"post","link":"https:\/\/www.jacksonwhitelaw.com\/probate\/blog\/can-you-sell-house-before-probate\/","title":{"rendered":"Can You Sell a House Before Probate?"},"content":{"rendered":"

Introduction<\/h2>\n

Probate<\/a> is the legal process of settling a deceased individual\u2019s liabilities, distributing their assets, and closing their estate. If the decedent left a will, their assets will be distributed according to the instructions in the will. In the absence of a will, the estate is considered \u201cintestate<\/a>,\u201d and the decedent\u2019s assets will be distributed according to the state\u2019s intestacy laws.<\/p>\n

When Does Probate Begin?<\/h4>\n

It\u2019s a common misconception that probate begins as soon as someone passes away. Probate is an intricate legal process, and it can\u2019t begin until someone submits a copy of the decedent\u2019s will along with a petition for probate to the county court (in the county where the decedent lived or owned property).<\/p>\n

Can You Sell a House Before Probate Begins?<\/h4>\n

The answer to this question depends on how the house is titled. If the house is owned in joint tenancy with another individual, or as tenants in the entirety with a surviving spouse, then the surviving owner receives full ownership and has the right to sell the house before probate. If the house is titled solely in the decedent\u2019s name or as tenants in common, nobody can sell the property before probate begins. The beneficiary, tenant in common, or executor may have the house appraised and list the property for sale if time is of the essence and they\u2019re acting in good faith, but they can\u2019t sell the property before probate.<\/p>\n

Can an Executor Sell Property During Probate?<\/h4>\n

An executor (aka the personal representative<\/a>) is the person appointed by the court to manage the estate during probate. The decedent\u2019s will should nominate an executor, but in the absence of a will the court can appoint an executor. In most cases, the executor is an immediate family member, though the court has the ability to appoint a neutral third-party special administrator<\/a> when necessary.<\/p>\n

Executors have the authority to sell property during probate, though they are bound by the decedent\u2019s will. If the will bequeaths the house to a single beneficiary, the executor should be able to transfer title of ownership to the beneficiary without selling the house. However, if there are multiple beneficiaries, or if the will specifically directs that all assets are to be liquidated before disbursement, then the executor may be required to sell the house during probate.<\/p>\n

Abatement<\/h4>\n

One of the most common scenarios that requires an executor to sell a house during probate is when there aren\u2019t enough liquid assets in the estate to cover the decedent\u2019s liabilities. The process of selling assets to cover liabilities is known as abatement. When abatement is necessary, the executor won\u2019t have any choice in the matter, and will be required by the court to sell the house in order to settle the estate\u2019s liabilities. Once the debts and bills are paid, any residual value from the sale of the house may be transferred to the estate\u2019s beneficiaries.<\/p>\n

How to Sell Property During Probate<\/h4>\n

As long as the estate\u2019s interested parties (beneficiaries, legal heirs, creditors) don\u2019t contest the will or object to the executor\u2019s appointments, probate can take place informally. Informal probate<\/a> allows the executor to handle the estate\u2019s affairs without court supervision, and that includes the ability to sell the decedent\u2019s house.<\/p>\n

If you are the executor to an estate during informal probate and it becomes necessary to sell the decedent\u2019s house, here\u2019s how to go about the process:<\/p>\n

    \n
  1. Have the property appraised \u2013 probate laws dictate that a house in probate should be sold for at least 90% of its fair market value, so you\u2019ll need to determine the fair market value to protect yourself against any personal liability from underselling the property. Hire a professional appraiser to determine the fair market value and compare their appraisal against comparable homes in the area that have recently sold.<\/li>\n
  2. List the home for sale \u2013 hire a real estate agent to help you determine the initial asking price and list the home on the market for sale.<\/li>\n
  3. Consider offers with the beneficiaries \u2013 you may have the right to act independently as the executor, but it\u2019s a good idea to keep the beneficiaries in the loop on big decisions like this if you want to avoid objections that may lead to formal supervised probate.<\/li>\n
  4. Accept an offer \u2013 when you receive an acceptable offer, the prospective buyer will need to put down at least 10% in escrow. Consider asking the beneficiaries to agree to the sale in writing, too.<\/li>\n
  5. Keep copious records \u2013 don\u2019t cut any corners when it comes to documenting and recording the sale. Make and keep copies of every document, contract, and agreement. You\u2019ll ultimately need to submit important documents from the sale to the court with your final accounting report, and you\u2019ll want sufficient documentation to protect yourself from personal liability if a beneficiary files a complaint with the court.<\/li>\n
  6. Sell the house and gather the proceeds \u2013 after you sell the house, gather the proceeds from the sale into an estate checking or savings account. From there, you can use the funds to settle the estate\u2019s liabilities and disburse any residual value to the beneficiaries.<\/li>\n<\/ol>\n

    Intestate Succession<\/h4>\n

    In cases where the house is not covered by a will (excluding joint tenancy and tenancy in the entirety), the court will transfer title of the house to the decedent\u2019s legal heirs according to the state\u2019s intestacy laws. Arizona intestacy laws dictate the following priority for legal heirs:<\/p>\n