Yet Another Real Estate Problem – Part 3
In this third post of three, I finish telling you about an executor’s sale of real estate that hit a snag. As I explained last week, the Buyer’s title company concluded that the decedent didn’t own 100% of the property. Instead they said he owned only 50%.
The confusion arose from that the fact that at one time the property was owned jointly by the decedent with his brother and mother. When his mother died her name was never removed from the deed. When the brother transferred his interest to the decedent, the title company concluded that the mother’s interest was being transferred at the same time. Since she had already died, this would constitute andimproper transfer. If that deed was invalid then the decedent still only owned 50% at the time of his death.
What the title company is ignoring, however, is the fact that when the mother died a transfer of her interest did occur. Jointly held property passes by law at death to the surviving co-owners of that property. Property that is held individually or as tenants in common passes by way of a last will or if there is none than by intestacy. Property held jointly passes by operation of law to the surviving co-owners.
The fact that a deed reflecting the new ownership interest and removing the mother’s name hadn’t been done doesn’t change who inherits it. That was set as of the date the mother died.
The title company’s conclusion that the deed transferring title from one brother to another is invalid because it improperly transferred the mother’s interest after her death is incorrect. That deed simply transferred the brother’s interest, which at that time was 50%. It had been 33 and 1/3% but when the mother died her interest, which was held jointly with her 2 sons, was transferred by law to them, making each a 50% co-owner.
As it happens, the decedent’s will left a part of his estate to the brother who transferred his interest in the home but what his estate should receive is a much smaller percentage than had he kept his 50% interest in the home before he died.
We increasingly see these types of cases coming to our office because nothing is done about administering the estate when an owner dies. Only years later when the real estate is sold do these issues come to a head. Ultimately we can sort them out and problem solve but the passage of time can and usually does cause delays and additional expenses such as unpaid taxes.
The better practice is to consult with an attorney familiar with these estate administration issues when someone dies rather than under the pressure of trying not hold together a real estate sale when the buyer loses patience or interest because of unanticipated delays.