Understanding the legal procedures that take place when a person dies can be challenging and often emotional. One term often encountered during this difficult time is “probate.” But what does it mean when a house is sold through probate? This process revolves around the management and final distribution of a deceased person’s estate, and it plays a critical role when the property in question is real estate.
What Is Probate?
Probate refers to a legal process that takes place after someone’s death. It involves the legal proceedings where the Register of Wills or the probate court determines the validity of the deceased’s Will, if any, appoints an estate representative commonly known as an executor or estate administrator and manages the distribution of the deceased person’s assets.
These assets, known as probate estate assets, could include items such as:
- Bank accounts
- Real estate properties
- Retirement accounts
- Personal property
- Businesses
- Antiques
Other valuable personal items and even life insurance policies are also included if no beneficiary is designated in the life insurance policy.
What Does It Mean When a House is for Sale in Probate?
When a house for sale is in probate, it means that the homeowner has died and the estate, including the house, is going through the legal process known as “probate.” During probate, the personal representative or the court, in some instances, will oversee the distribution of the estate’s assets, including the sale or transfer of the house, to the beneficiaries or a third party as per the Will of the deceased.
If there is no Will, the distribution will follow the state laws known as “intestate laws.” In some cases, the house cannot be sold unless the court gives permission. This process ensures, among other things, that the house is sold at the best possible price and the profits are distributed correctly.
What Is the Process of a House Selling Under Probate?
Step 1: Obtaining the Required Documents from the Register of Wills or the Court
Selling an Estate-owned house requires that certain legal proceedings involving the estate of a deceased person have been complied with. The legal process starts with the appointment of the Estate’s personal representative, who is known as the estate’s “executor” or the estate’s “administrator.” The Register of Wills is responsible for this appointment. Once appointed, the deceased’s nominated or appointed executor or administrator is in control of the decedent’s (probate) property.
This stage in the probate process entails the submission of a Petition, a death certificate, the Will, assuming the previous Decedent left one, and certain other documents, including, in certain situations, a surety bond. A hearing before the Register of Wills is also required. This hearing can often be completed remotely. Pennsylvania has 67 counties, and the procedures required to complete the probate appointment process vary from county to county.
Step 2: Assessment of the Property
The next phase includes assessing the value of certain of the Decedent’s assets. This process may require the services of a professional appraiser to calculate the value of the deceased’s real estate properties and other personal assets. The appraisal can determine the benchmark for the listing price for the sale of the deceased’s estate assets, including real estate, businesses and other valuable items.
In some instances, the personal representative may consider making certain repairs or modifications to the property in advance of the sale so as to ensure the maximum return on the real estate.
Step 3: Ensuring that the Probate Property is Properly Secured
One of the more important responsibilities of the personal representative is to ensure that the probate property is safe and secure. In some cases, this will require the personal representative to maintain (or purchase) probate property insurance to protect against potential casualty losses and damage to the property. If the estate property is vacant, a special vacant property homeowners policy may need to be purchased.
Estate probate properties held during the winter months may require additional attention to ensure that the sidewalks remain clear of ice and snow and that water lines inside the house do not break. In certain circumstances, the house will need to be winterized. The personal representative may, in some cases, need to pay –with Estate funds, if available- the outstanding utility bills to ensure that the estate probate property heating system remains working.
Step 4: Payment of Debts and Taxes
The estate personal representative will be responsible for analyzing any encumbrances (debts or liens) against the Decedent’s real estate, such as judgments, mortgages and other liens which may need to be satisfied at the time that the real estate is sold or transferred, or earlier. It may be advisable to obtain a title report of the sale in advance in order to clean up any problems with the title.
Step 5: Sale of Property
Hiring experienced real estate agents knowledgeable in the probate process is necessary to ensure the proper guidelines are followed. Since the sale of the property may require probate court approval, the estate administrator may also need a probate attorney with experience in estate probate matters for professional legal advice.
Step 6: Distribution of Assets from the Sale of Probate Estate Property
The last stage of the process is known as “settlement” or “closing,” which completes the probate sale process. This generally requires the involvement of a title company, which will require the estate administrator to comply with certain other requirements in advance of “settlement” or “closing.” “Settlement” or “Closing” can generally be completed remotely.
What Makes a House Sale Under Probate Complicated?
Legal Formalities and Practical Considerations
From both a legal and practical perspective, managing houses in probate is no simple task. The sale or transfer of real estate properties can involve a number of legal issues and practical considerations. While the entire process can be completed in as little as several months, it can take much longer. Alongside the management of other probate assets, the whole venture can be overwhelming, especially in the absence of legal advice.
Slow Process
Registering another tick in the complication column is the slow pace of the entire probate process which can be attributed to compulsory court approval in some estates.
High Costs
Another complexity arises from the high costs tied to probate sales. Substantial estate taxes and administrative expenses are some typical probable costs. Additionally, in cases where the property is in bad condition, probate home rehabilitation costs can also be factored in unless the property is sold to an investor as opposed to an end user.
Maximizing the Sale Price of Probate Properties
The sale of a house in probate may involve complicated paperwork and deviate from the norm of a regular real estate purchase, which may limit potential buyers. This complexity can deter average buyers, setting the stage for only serious and financially capable buyers or investors, usually those accompanied by a real estate attorney, to venture into probate sales. More importantly, since probate properties are often left in poor condition due to years of neglect, it is critical that your real estate agent and/or your attorney have access to a list of private investors who are looking for these types of properties.
Get Probate Process Support Today
Are you dealing with a house in probate and unsure where to start? At Heiligman & Mogul, P.C., we understand how challenging this process can be. Our experienced probate lawyers are ready to guide you through each step of this complex procedure, simplifying and streamlining wherever possible and helping the estate to realize the greatest amount for the purchase price. Don’t go through this process alone. Let our capable team assist you.
Call us today at (215) 561-0111 or email us at info@heiligmanandmogul.com to schedule a free consultation immediately.