When you are the named fiduciary of an estate with real property such as a house or a condo, you will likely be charged with selling the property and distributing the proceeds to the estate’s beneficiaries. However, it is more complicated than simply listing the property for sale and certain steps must be taken to do it properly.
Unoccupied real property can quickly become a financial burden on an estate as there will continue to be maintenance costs and inherited real estate taxes that must be paid. Even real property that is occupied by a tenant and thus carrying itself financially can cause hardship for those not wishing to deal with the headaches associated with being a landlord. Because of this, it is usually in the best interest of the estate’s beneficiaries to see the property sold as quickly and efficiently as possible. In order to begin the process, an Executor or Administrator must be appointed by the Surrogate’s Court. This process can take up to six months in some New York Counties because of a back-log of cases clogging up court dockets and therefore it is wise to begin the process as soon as possible.
The process of appointing an Executor or an Administrator is called Probate (in cases where the decedent left a will) or Estate Administration (in cases with no will). A petition must be submitted to the Surrogates Court where a judge will review its contents to ensure that all relevant family members of the decedent have been notified and that the will, if any, was properly executed. The court will then issue Letters Testamentary or Letters of Administration to the Executor or Administrator of the Estate.
Once you have been officially appointed as the fiduciary of the estate, you will then have the authority to enter into a listing agreement with a real estate agent and subsequently into a contract with a prospective buyer of the real property. It is important to have an estate fiduciary appointed as even in cases where a buyer is willing to enter into a contract with only an affidavit of heirship, a title company is unlikely to clear title to a property without Letters Testamentary. Your probate attorney will need to be in communication with your real estate attorney to advise you what documents you will need to bring with you to the closing. This will include your current Letters Testamentary and your photo ID.
While the estate’s beneficiaries may be expecting to receive their share of the sales proceeds at the closing, this is not usually what ends up happening. The estate likely has taxes to file as well as other reimbursements and outstanding expenses that must all be satisfied before any distributions can be made. Always consult your estate or probate attorney before writing any checks to beneficiaries as improperly settling an estate can be a costly mistake.