Houses in Probate: An Overview of the Process and How it Affects the Property
Probate in general is complicated, and having a house involved in the probate process can make the situation significantly more complex. Houses as part of a deceased one's estate often have to be sold to satisfy the probate process. Below, we've compiled a lot of what you need to know if you're dealing with a house in probate.
What Is Probate?
In simple terms, probate refers to a legal process where a will is reviewed to determine whether it is authentic or not. Probate also refers to administering of a deceased will or the estate of a deceased person without a will. This process involves organizing their assets and possessions and distributing them as inheritance once all debts and taxes have been paid. In the case that the deceased left a will, it will have the name of the person that they choose to administer the estate. This person is known as the executor.
Before the probate starts, the executor first needs to apply for a grant of probate — a legal document that gives them the authority to execute the deceased property. The grant of probate will be given once all tax and debts have been paid. After that, the executor is free to distribute the rest of the estate according to the deceased will. Sometimes probate can be quite complicated if there are disputes between the beneficiaries, executor, or creditors.
What Is a Probate Sale?
A probate sale occurs when the owner of the property died and did not leave a will that indicates to who the property should be given. In such a case, the estate attorney and personal representatives will have no choice but to distribute the property then share the proceeds to the beneficiaries, which include immediate close family members after all taxes and debts have been paid.
Probate sales are usually a lengthy and complicated process because the court is involved. The court will directly supervise the sale process. That explains why many people usually hire a probate attorney to handle the entire process.
How Does a Probate Sale Work?
Because of the complexity of a probate sale, the first process that most people do is hire a probate attorney to handle the entire process. The attorney will then contact a reputable real estate agent to list the house. Once a buyer makes an offer on the estate, the lawyer will contact the estate representatives and inform them about the offer. The estate representative must first accept the offer before the process moves to the next stage. The court will then check the process and give feedback within 30 days as to whether the buyer should move on within the transaction or not.
It Is Wise to Purchase a Probate Sale?
It depends. The truth is that probate sale is not good for every buyer considering the complexity and length of the process. Before you decide to go this route, you first need to determine what is good for you and your family. For instance, do you want to buy a house quickly, or do you want to buy it at an affordable price?
If you want to buy a house quickly, then probate sale is not a good option for you. On the other hand, if you want to buy the property at a good deal and you are willing to wait, then a probate sale may be a good option for you. Most homes sold via probate sale are usually less expensive compared to other properties around, not because they are not good enough but because the entire process takes a lot of time to complete. When deciding to buy a probate property, you also need to factor in the cost of repairs.
How Long Does a Probate Sale Take?
Probate sales are a complex and lengthy process. But how exactly long does probate sales take? If there are no complications, applying for a grant of probate will take around 4-8 weeks from the time of submission.
But that is just the start; the time it will take to complete the distribution of money between the benefices will vary depending on various factors, including whether the property has been inherited, whether there are disagreements between the beneficiaries, state probate laws, the estate size, whether there is will or not and more. But generally, probate sales usually take between 18 to 36 months to reach completion. This is way much longer than the time taken to sell a normal property.
Because of the length of time, sometimes executors want to know if the house in probate can be rented out or lived in by them or one of the beneficiaries. This can complicate things but in some cases it's allowed. Get more information on living in a house that has entered probate.
What Happens When a House Enters Probate?
There are multiple scenarios that could occur when a house enters probate. In this section, we will discuss various possible scenarios when a house enters probate.
Scenario 1: The property is transferred to beneficiaries named in the will:
If the deceased left a will to transfer the estate to heirs, then the executor named in the will executes the deceased's final wishes. The process involves the executor filing a petition in the probate court in order to be granted legal authority to access change or administer the estate. This process could take weeks to complete and thus should be started as early as possible. The court will then convey the property to the heir based on the instructions given in the will. The beneficiaries can then sell or keep the property.
Scenario 2: The property is given to the surviving spouse, children, or next of kin:
Another possible scenario when a house enters probate and the deceased did not leave behind a will is a property being given to the surviving spouse, children, or next of kin. This process is a must, especially if the house has not been transferred on death deed or through a living trust. The judge will name the immediate family member as the executor of the estate.
Scenario 3: The executor of the property sells it with probate oversight:
If the deceased did not mention any beneficiary of the property in the will, then the executor of the estate will be allowed by the court to sell the property in probate. This process involves the executor partnering with a real estate agent and real estate attorney to handle the entire process.
Why Is a Home Sold Through a Probate Court?
The reason why a home is sold through a probate court is that it was owned by someone who has died. If the deceased did not leave a will to indicate who should inherit the property, the property is meant to be sold and the proceeds divided among the beneficiaries.
The home of the deceased may also be sold by the executor if the deceased had an outstanding debt that needs to be paid. If the heirs don’t have enough money to pay off taxes and outstanding debts to creditors, the executor will have no choice but to sell the deceased home through probate court. It is important to note that debts don’t end when a person dies; instead, it follows their properties.
When the property owner dies, the executor or beneficiaries cannot sell or share property on their own. The court takes over the process and must approve every step until the estate is sold. The court must approve the final transaction before the buyer takes over the property. Property representatives are only responsible for taking care of the estate and facilitating probate sales. However, they have no power to determine who buys or how the money will be shared among the beneficiaries. The court will handle this process.
The court takes over the process to ensure that the estate is handled as per the laws and regulations that have been put in place by the state.
Two Paths for a House in Probate: Conveyance to Survivors, or a Probate Home Sale
What happens to a house in probate varies, depending on the state in which the house is located. However, one of the following things may happen: The survivors of the estate may inherit the house, or the house will be sold via a probate court.
Common Mistakes in a Probate House Sale
- Administering the process without a proper plan. If you want to process to be smooth, then you must have a clear plan of how the probate sale will be executed.
- Not hiring a real estate lawyer to handle the process on your behalf. Some people usually think that they can handle the probate sale process on their own. The probate process is complex and needs to be conducted by someone who understands it like a real estate attorney and a reputable real estate agent.
- Waiting for so long before you begin the process. This will add pressure and demands from others. The longer you wait, the more complicated and costly the process will become.
- Choosing friends over professionals to do certain jobs. Friends lack knowledge of what needs to be done, but professionals know what needs to be done to complete the process successfully.
- Failing to prepare an accurate inventory of assets. This way, you may end out leaving our debts and taxes that the deceased had accrued, and this will derail the probate process later.
Summary: Have a Plan When Working With a Probate Property
If your loved one has passed and you want to sell the deceased property, or you are a buyer who wants to buy a probate property, we hope that the information provided will help you make an informed decision. Selling a probate property is a long and tedious process. If you want the process to move smoothly, you should hire professionals like real estate attorneys to guide you through the process.