Walking the Line: Probate and Estate Sales

Risk-Management-WordPress-Header

The process of administering a decedent‘s estate is referred to as “probate,” and is generally supervised by the probate court. A personal representative is the person or entity charged with the responsibility of administering a decedent’s estate. A personal representative is either:

  • An executor who is named in a will; or
  • An administrator who is appointed by the court when there is no will, when the will does not name an executor or when the named executor is unable or unwilling to serve.

In order to avoid the court probate process, the property owner may have set up a Trust prior to their death. During the life and competency of the property owner this type of trust is considered a revocable living trust with the owner(s) as the Trustee(s). If one of the owners dies the Trust remains a revocable trust under a spouse or other named Trustee and as such is not exempt from any disclosure requirements or laws.

Upon the death of all Trustees of the Living Trust, there would be another person or persons named as Trustees and they would assume responsibility for the Trust assets and distribution as called for in the will. The Trust at that time becomes irrevocable, i.e. cannot be changed or altered by the new Trustee(s).

How does this impact us as agents representing the sale of a Probate or Trustee sale of real property?

When the sole surviving person on Title dies, the laws regarding disclosure change dramatically. For example in California there is no obligation for the Executor, Administrator or Trustee to provide the Buyer with many of the Statutory Disclosures required in the sale of 1-4 Residential units, including the Transfer Disclosure Statement, Seller Property Questionnaire, NHD reports and others ( See Sales Disclosure Chart for Realtors provided by C.A.R. for California properties)’

However if any of these persons has actual knowledge of material facts they are obligated by law to disclose them. Agents are ALWAYS required to perform the Agent Inspection in California even if the Seller is exempt.

In Nevada the Executor or Trustee would be required to fill out the Sellers Real Property Disclosure (SRPD) to the best of their ability.

The Seller is not exempt if they are the surviving Trustee of a revocable trust, for example if a husband and wife or parent and child are co-trustees of a Living Trust and one of them dies the other is still responsible for all Federal and State disclosure laws.

Also for sales in California where someone other than the person listed as the owner of the property is signing Listing Agreements or Purchase Contracts we must complete a Representative Capacity form which notifies us and the escrow company who has authority to sell the property and requires showing a document giving them that authority.

In Nevada the title company looks to the courts to confirm the authority of the party if the owner on title is deceased. If the property was held in trust then a copy of the trust will need to be provided to the title company so the proper determination can be made as to the authority to sell the property. It is always smart if an agent runs across this they should consult with the title company at the time of listing so options can be discussed on how to resolve.

As always if you have any questions regarding this information, please speak to your Manager or contact Linda Kaneko for CA or Ron Hoy for NV.

 

Written by Linda Kaneko, General Sales Manager, Select Group Real Estate. For questions or  further information email Linda.kaneko@selectgroupre.com.

  What would YOU like to see in the next edition of Risk Management? Let us know.

Risk-Management-WordPresst-Footer

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s