How to Properly Handle Estate Property Sales

(EDITOR’S NOTE: OUR INTERVIEW TODAY IS BETWEEN NORTH CAROLINA REAL ESTATE BROKER “ANITA SELLS,” AN EXPERIENCED AGENT, AND ATTORNEY “ELLE WOODS” REGARDING SPECIAL CONSIDERATIONS RELATING TO THE LISTING AND SALE OF PROPERTY OWNED BY HEIRS OF AN ESTATE. YOU MAY HAVE HEARD OF BOTH. ANITA IS AN EXPERIENCED AGENT WHO IS USED TO MOVING FAST AND WHO LISTS AND SELLS MANY PROPERTIES IN A YEAR. A SIGN ON HER DOOR SAYS “MULTI-MILLION DOLLAR PRODUCER.” ELLE’S BEST KNOWN FOR HER LITIGATION SKILLS DEVELOPED AS A CRIMINAL DEFENSE ATTORNEY, BUT HAS SINCE BECOME A BOARD CERTIFIED SPECIALIST IN RESIDENTIAL REAL ESTATE IN NORTH CAROLINA.)

Anita: I had a listing appointment on property that was owned by Ma Barker scheduled next week, but Ma passed away before I could meet with her. Now her daughter, Moonbeam, wants me to sell the property. Can I do that?

Elle: Yes, you can list and sell any property if you do it within the rules and regulations of your profession. Let’s think about this from two perspectives: w You want the parties signing the Offer to Purchase and Contract to have the ownership and authority necessary to convey title when you reach closing, and; w You want your listing agreement and associated documents to be signed by all parties with a legal interest and with authority to act with regard to the property to insure payment of your fee at a successful closing.

Anita: Moonbeam says she will sign whatever I ask her to. I know she was Ma Barker’s daughter, although there was talk of her being adopted. That’s enough to list the property, isn’t it?

Elle: No, not unless Moonbeam is the only heir and has been designated by the Superior Court or Clerk of Court as the personal representative of the estate (called an “executor” if there is a will and an “administrator” is there isn’t a will). Moonbeam’s cooperation is great, but you will need more signatures. The personal representative will be required to join in the sale of the property if it is being sold within two years of the death of the deceased owner (called a “decedent”) and prior to closing the estate file. If the administration of the estate is completed and the final accounting filed with the clerk, the estate file is deemed closed. Additionally, the personal representative may elect to sell the property without the consent of the heirs if the court agrees that is necessary to pay the debts of the estate. The personal representative should always join in signing the sales contract and listing agreement along with any heirs, unless the estate has been closed. Once the estate is closed the personal representative has no more authority to act and is not a necessary party to the transaction.

Anita: What’s this about heirs? The only heir I know is Moonbeam.

Elle: The determination of who the heirs are depends on whether or not the decedent had a will. North Carolina law, which was clarified this year, provides that if Ma Barker (or any decedent) had a will and it was filed with the Clerk of Court, it is effective to pass title to real property to the heirs named in the will immediately upon filing of the will, retroactive to the date of death.

If Ma passed away without a will, her heirs are determined under the laws governing the administration of an estate without a will (called “intestate succession” or “intestacy”). Here are few brief examples of how the intestacy laws work: w If Ma is survived by two children, the property would pass equally to the two children. (If Moonbeam really is adopted she will be treated just like any other child.) w If Ma is survived by one child and two grandchildren (the children of another child of Ma’s), the property would pass 50 percent to her child and 25 percent each to her two grandchildren. w If Ma is not survived by children or grandchildren but her parents both survive, the property would pass 50 percent to her father and 50 percent to her mother. A surviving spouse always has an interest in their spouse’s property under the intestacy laws, but typically any real property owned by husband and wife is owned by tenants by the entireties, in which case it passes automatically to the surviving spouse avoiding the estate administration process.

Anita: I have heard that Ma had a will. Is it pretty simple to tell who owns the property in that case?

Elle: No, it is often difficult to interpret and ascertain the decedent’s intent in a will. Wills can give authority to an executor, a trustee, or an individual to sell real property with or without the consent of the heirs of the estate. You will want all the parties who have an interest in the property to sign your listing agreement and any sales contract.

Anita: How will I know who those parties are? Am I allowed to request a copy of the will?

Elle: You are absolutely allowed to ask for a copy of the will. In fact, it is your duty to make sure to the extent possible that you have the correct owners and parties with an interest in the property signing any sales contract to assure their cooperation at closing. To be effective, the will must be filed with the Clerk of Court’s office, so there is no reason for Ma’s heirs not to provide a copy of this document to you. You may also be able to look at a copy at the courthouse. You are not expected to be an attorney, certifying as to the ownership of the property, but you are expected to determine the proper parties to the extent you are reasonable able. A will may include language creating trusts, making special provisions for tax consequences, and other language difficult to interpret. Because you want to make sure all the parties with an interest in the property sign all documents, it is advisable to have your favorite attorney review the will or the facts of the intestacy. The attorney can give you an idea who should sign the pertinent documents and who will be needed at closing to execute deeds and other pertinent documents. A good rule of thumb is to have any known heirs and their spouses included in your documentation, as well as the personal representative if there is one.

Anita: What would have happened if Ma Barker had signed an enforceable written contract to sell prior to her death?

Elle: The heirs take the property subject to whatever enforceable written contract had been signed by Ma at the time of death, so the transaction would proceed as if Ma had not passed away. However the signatures of the heirs and other parties with an interest will now be needed on the deed and other closing documents. Go to see your favorite closing attorney immediately for advice. Certain time constraints will apply, and they can be minimized by quick action in the probating of the estate.

Anita: What if Ma had the property listed before she died, but it hadn’t sold? Would I still have the listing?

Elle: Although the listing agreement may be enforceable against Ma’s estate like any other contract that she may have entered into before she died, the best practice in this situation would be to execute a new listing agreement with the heirs and their spouses as well as the personal representative. This will confirm the new owners are amenable to the sale of the property and the proposed terms of listing and avoid later problems with a recalcitrant seller who feels they have not been properly consulted.

Anita: I have heard Ma may have had other children that Moonbeam has not mentioned. What do I do about that?

Elle: You find out if she did by asking Moonbeam, the neighbors, Ma’s minister, and anyone else you can find. It won’t do you any good to sign a contract and then find some owners will not participate in the sale later.

Anita: I would rather just deal with Moonbeam. Is it acceptable for me to take her word on whom the owners are and worry about it later if something shows up?

Elle: No, but you might consider engaging an assistant to help you by doing the exploratory discussions with Moonbeam, friends and neighbors, and even the attorney for Ma Barker, to make sure you know as many facts about ownership of the property as you can. It is always best to know all the facts of ownership at the outset.

Anita: I heard about a case where the buyers bought the property from the intestate heirs who did not know there was a will. Later, a will was filed with different heirs granted the property under the will than the ones that sold the property. How can I protect a buyer who is interested in buying estate property?

Elle: That could happen. If the buyers of the property were unrelated to the sellers and purchased it for value as bona fide purchasers, they would retain their interest in the property. The heirs who sold without knowing of the will would (continued on page 14)

(continued from page 13) be obligated to reimburse the actual owners under the will if the will was filed within a certain time period.

Anita: Ok, I have to run to a listing. Do you have a checklist that I can use on these type cases?

Elle: This might help: w Who passed away? w When did they pass away and is there a copy of the death certificate? w Has an estate been opened with the Clerk of Court? If so, does the estate have an attorney who can help answer your questions? If so contact him or her. w Is there a will? If so, obtain a copy and read it. w If there is not a will the heirs will still need to open an estate with the Clerk of Court and list the heirs by intestacy. w After discovering as much as you can of the facts of the decedent’s family, have all heirs, heirs spouses, executors, administrators, and trustees join in executing your documents unless you have a really good reason not to.

My last bit of advice: If Ma’s heirs do not yet have an attorney, make them go see one. It will simplify your life and you will be going to lunch soon with an attorney thanking you for the referral with an all expense paid lunch.

The author is a member of the law firm of Wishart Norris Henninger & Pittman and works in the firm’s Charlotte office. He is a board­certified specialist in residential real estate whose practice areas include residential and commercial real estate, loan workouts, asset protection and foreclosure defense. He can be reached at gregory.kunkleman@wnhplaw.com. v