Real Estate Sale After Death (Part 2)

In my blog post last week, I told you about a number of cases in our office in which we were contacted to help with a real estate closing that was delayed at the last minute.   Shortly before the closing it was discovered that the person who signed the real estate contract didn’t actually have authority to complete the transaction because he or she didn’t own the property.  The owner is deceased so only the executor of the will or – if there is no will – the appointed administrator has the authority to sell and then distribute the proceeds to the rightful heirs.  So, why doesn’t this important fact come to light sooner? 

A general lack of knowledge about probate and the estate administration process is probably the reason.  As I explained last week, most people are unaware of the Surrogate and what that  office does.  But asking questions at the beginning of the real estate sales process can avoid the scramble to hold a transaction together.

For example, the realtor for the seller usually knows at the time he or she is hired that the owner has died.  The realtor should immediately ask the client for a copy of the Surrogate papers.  If the realtor gets a confused response that should raise a red flag.  Although the seller isn’t always represented by an attorney, when there is one, which occurs  once a contract is signed with a prospective buyer, the attorney should make the same inquiry.

Waiting until the buyer’s title company does it’s title search is often too late.  By the time the title binder gets to the seller’s attorney (if there is one) and everyone realizes there is a problem, the closing date has been scheduled.  If the original will is found the probate process can be done quickly, however, if there is no will the administration process can be more involved. I very often must explain to the parties that while we will work as quickly as we can, the Surrogate’s office processes the paperwork and we have no control over that timeline.

Spotting these issues early and getting a client to an estate administration attorney if necessary can be the difference between keeping a deal together vs. finding another buyer.