Probate sales present legal issues that rarely occur in a “typical” real estate transfer. In most real estate sales transactions the parties involved are alive and can respond to any questions related to the property and its title. This is not the case with probate. By definition, a probate case means that someone has died which makes them unavailable to address issues in regard to the property in question. This fact presents issues that can be difficult to resolve.
We have learned by experience what some of those issues are and how to prepare ahead of time for them. We will elaborate on the 5 most common problems we’ve seen arise in the sale of a Maryland probate property. These are not hypothetical issues, but ones we have encountered in the real world. We will state the problem and its solution in the hopes that you won’t have to learn as we did, thru “expensive” experience.
Problem – Three sisters placed their mom who had dementia in a nursing home. The property she had lived in for forty years needed to be sold. The property was marketed and sold to an investor with plans to renovate and resell the house. All went well with the initial sale. Three months later, after the renovation was complete, the house was placed on the market and a contract accepted within a week’s time.
When the title company did the title search they found that the owner’s dead husband had never had an estate opened upon his death. In order to convey the property, his estate had to be opened even though he had died over ten years before! The first title company had missed this entirely.
The new owner’s title insurance covered all the legal costs, but the buyer walked. It took three months to clear the title! We had to market the property again, but the second sale netted $30,000 less than the previous sale! That was a $30,000 mistake!
Solution – In cases where the seller has a deceased spouse make sure that you have the deceased’s death certificate and proof that their estate was “probated” correctly. This will save you significant time and frustration.
Problem – Lillian Frances died (fictitious name) and her grandson was appointed the personal representative. The fact that he was young and it was his first time serving as a PR, made him fearful of making a mistake. He relied heavily on his DC lawyer and on us as his agents. We were able to find a buyer with an offer over his asking price. All went smoothly until the title work was done.
The title company found that Lillian’s husband died in Louisiana and that there was no death certificate on file in this jurisdiction, DC. A paper copy of the death certificate was required to close. The settlement date had to be rescheduled until a paper copy could be obtained. Of course, there was difficulty in getting the State of Louisiana to release a copy to an out of state party. So, the settlement was postponed for 37 days until the copy was obtained and recorded.
Solution – Make certain that you have a copy of the death certificates of all deceased co-owners, no matter the date of death or the location of death.
Problem – A PR (Personal Representative) inspected her deceased brother’s vacant house in NW, DC. She was surprised when she got there to find a “squatter.” The squatter appeared to have some mental issues and claimed the property as his own. The squatter refused to leave and went as far as to assert his rights in court! Much to the chagrin of the PR she had to actually retain a DC lawyer and go to court. She eventually won the case but lost time and money in the process.
Solution – Make certain that the real property is secured. Certain people look for clearly vacant or abandoned properties to use them for their own designs. We advise our clients to work with a reputable Realtor early, so they can visit the property regularly and help prevent vagrant and squatters problems, which are becoming more and more frequent.
Problem – The PR thought that she could sell the property on her own without using a Realtor. She was getting lots of calls from investors that got her information from the Register of Wills office. She met with several of them and got an offer that she accepted. It was a good offer, so she thought. As the settlement date approached she began to get nervous. She hadn’t heard from anyone about the sale and thought that she should have been notified as to the place and time of closing. The settlement date passed.
The buyer was not able to get the money to buy the property and left the PR disappointed and angry. She contacted our firm and we were able to get a buyer and get the transaction closed.
Solution – Most PRs are new and don’t understand what happens in the real estate market place. A large number of investors are what we call “wholesalers.” The get a property under contract and then “shop” their contract to other investors who are “renovators.” Renovators remodel and resell the houses they buy. Our PR had unknowingly contracted with a wholesaler and the wholesaler was not able to sell their contract to a renovator. The deal died.
She also didn’t understand that by offering it to such a small pool of buyers that she would not get the highest price for the property. By utilizing our services which include very effective marketing strategies to both renovators and homebuyers, she was able to get a higher than expected price and avoid the headaches of vetting her buyers. We’ve said it before, “Experienced Realtors matter when it comes to probate.”
Problem – Anna Mae, the PR, lived in Mobile, Alabama. She’d been sick recently and couldn’t travel to the DC area. It was also winter and she had an aversion to cold climates. We encouraged her to “list” the house with us so that we could get it on the market and sold. She decided to wait. Unfortunately, that was the wrong thing to do. The pipes burst in the house and the water turned the whole house into an “ice castle.”
After arguing with the insurance company over the claim, hiring and firing two contractors, and a myriad of other issues, it would take a full year for the property to be repaired and sold!
Solution – Hire a Probate Realtor early in the process. They should be able to assist you with all property related issues – up-keep and maintenance, winterization, clean-outs, and other issues. (See Our Complete Service List)
These are some of the probate issues we encounter on a regular basis. Some real estate agents will find them difficult to manage, for Probate Real Estate Services & Sales, probate specialists, we consider it a “walk in the park.” Call us to discuss your situation, we will be glad to assist.