Probate properties refer to real estate which is held in a probated estate. Probate is the process used to settle decedent estates and distribute inheritance property to designated heirs. In order to transfer titled property to heirs, real estate property transfer documents must be recorded through the court.
Probate properties can be tied-up in court for months and cause financial hardship to the estate. Decedent estates are required to pay expenses connected to the property until probate settles. Costs can include mortgage payments, property taxes, homeowners insurance, homeowner’s association dues, and maintenance expenses.
Probated estates are managed by a probate executor. This person is appointed within the decedent’s last will and testament. If a person dies without leaving a Will, the estate executor is confirmed through the court.
Estate administrators are responsible for settling the estate and overseeing distribution of inheritance property. When real estate is part of an estate it is best to work with a probate attorney to ensure proper protocol is followed.
If real estate does not transfer to a surviving spouse, estate executors must secure the property and obtain a real estate appraisal to determine current market value. If the estate does not possess the financial means to pay creditor debts and real estate expenses, probate properties can be sold to reduce the financial load.
If real estate is bequeathed to multiple heirs they must all agree to sell the property, unless the sale is ordered through the court. The process for selling probate property varies by state, as well as the type of probate used.
Some states require probate executors to obtain court approval for all estate transactions. Others allow estate administrators to manage the sale of probate real estate on their own. It is crucial to understand the process required and adhere to state probate laws.
Selling probate properties can eliminate multiple estate administration tasks and can be particularly helpful when real estate is located in another state. Since probate personal representatives are required to maintain property throughout the probate process, they often must hire subcontractors to perform duties such as lawn care and general maintenance. These expenses reduce the amount of inheritance money available to heirs.
If probate executors hire a realtor to list the property for sale, the estate is responsible for paying closing costs and realtor commissions. If probate real estate can be sold without court supervision, estate administrators should consider selling to real estate investors with experience in buying properties held in probate.
Locating probate properties for sale requires individuals to research public records available at local court houses. Upon death, the decedent’s last Will is presented to the court. Probate wills are a matter of public record and can be viewed by anyone. Investors review probate records to locate estates with real estate holdings and obtain contact information for the probate executor. They then research property records to obtain information about each probated property.
Property records reveal the appraised property value, lot size, number of rooms, year built, and square footage. Property records also show if the property is secured by a mortgage loan or if creditor judgments or tax liens are attached.
When probate sales are supervised through the court, anyone can submit a bid for purchase. When probate sales are managed by probate executors, buyers submit purchase offers directly to the Administrator or their representing realtor. In some instances, probate property sales are handled by the estate’s attorney.
As with any real estate purchase, buyers must conduct due diligence to ensure the property is worth the asking price. At minimum, buyers should obtain property inspections and real estate appraisals.