Selling a property as an Executor of an estate can be a little bit trickier than a regular sale of a home. The trickiness often lies in the timing. When selling the principal residence of a deceased, for example, the Executor will need to obtain what is called Letters of Administration with (or Without) a Will—what used to be called Probate. For the purposes of this article, we will continue to use the old term, Probate, since it is more commonly known by that title. Probate gives the Executor authority to manage and settle the affairs of the estate. Therefore, without Probate, the Executor cannot sign the legal documents required for the sale of the home.
If a person has passed away and the Executor will have to sell the principal residence of the deceased, the first step is for the Executor to locate the original Will –if there is one. After the search, the Executor will know whether they need to file for Probate with a Will or Probate without a Will. Assuming there is a Will that names the Executor, the documents will need to be filed with the court. It can take between 6 to 8 weeks to have the documents Probated and the Executor to receive official authority to act on behalf of the estate. Therefore, if a house is being sold or is listed for sale, it is important to communicate the timelines for Probate with the real estate agent so they can negotiate a closing date that will occur after the Will has been probated. If the Executor has not received Probate by the closing date of the sale, the title of the property cannot be transferred on that date.
While the Executor is waiting for the Will to be probated, it is a good opportunity for the Executor to gather the other documents the real estate lawyers will require before the closing date. The real estate lawyer will be asking for the deceased’s property tax information. The lawyer will want to know the property roll number, what the total amount of the most recent bill was, and whether the property taxes have been fully paid or if there are any property tax arrears to be paid. If the Executor cannot find this information the lawyer can request a tax certificate from the city which will provide this information, however, the tax certificate does come with a fee from the city. If the property is a condominium, the real estate lawyer will want to know the amount of the monthly common expenses and whether they have been fully paid. The lawyer will also want to know whether there are any special assessments against the unit and if so, whether they have been paid in full. The Executor has the authority to obtain this information from the Condominium Corporation directly. Finally, the lawyer will want to know whether there are any rental items such as propane tanks in rural properties that will need to be adjusted for on the closing date. There is often a sticker on the tanks to indicate which company the tanks are rented from. The Executor should call the rental company to find out the rental amount and the payment period for the adjustment.
In situations where Probate cannot be obtained before the closing date, there are two options for how the transaction may proceed. First, the buyer and seller (the estate) can amend the closing date to extend until after Probate is obtained. However, many times the buyer is selling their own property at the same time and is not able to move the closing date of the sale of their own property. Therefore the second option, if both sides are agreeable, is to enter into an escrow agreement. In an escrow closing agreement, the buyers would move in on the scheduled closing date but would not become the legal owners until after probate is obtained and the title is transferred. The Estate and Buyer may also agree to a rental situation wherein the buyers would take on responsibility for the property taxes, utilities, and place their own renter’s insurance. The estate would then use the rents paid by the buyer during this time to cover the estate’s mortgage costs until the transfer of title can be completed.
When Probate is obtained and the sale transaction can be completed, the Executor will need to meet with the real estate lawyer to sign the necessary legal documents to complete the sale. Once the title to the property has been transferred to the new buyers, all proceeds of the sale would be deposited into the estate account for use as set out in the deceased’s Will.