Probate and Estate Sales
Selling A House In Probate.
What is Probate?
Probate is legal process that determines and handles the fair and orderly distribution of debts, obligations and benefits after a person dies. The probate process is designed to take care of two primary functions 1. Paying debts and obligations that are owed by the decedent; and 2. Distributing or giving away assets to the decedents beneficiaries.
Selling Real Estate through the probate process:
Under the Massachusetts Uniform Probate Code (MUPC), a house can be sold during probate so long as the seller can pass on a clean title to a buyer.
During the probate process, it may be necessary to sell a house in order to repay debts owed by the deceased person’s estate, or beneficiaries may come to an agreement to sell a property and distribute the proceeds under the supervision of a probate court.
A decedent may have a Will wherein a personal representative (formerly called Executor) of the estate is designated. If there is no Will, the decedent is deemed "intestate" and the court will appoint a personal representative, usually a close relative, to administer the estate. In all cases, the probate process must begin within 3 years of the decedent’s date of death. The Personal Representative has a fiduciary obligation under statutory law to get the highest possible price on the sale of the real estate for the heirs of the estate.
Listing a home for sale:
Once the personal Representative has been officially petitioned and appointed. A decedents home can be listed for sale. The listing / listing agent should clearly disclose that the sale of the home is subject to obtaining a license to sell by the court. The process to getting a home in probate under agreement is as follows:
- Prepare the home for market. (clean out, clean up and make repairs, photograph the property and prepare the real estate listing.
- Officially list the home for sale on the local multiple listing service.
- Obtain and Execute a formal "Offer to Purchase" contract with a bona fide buyer.
- Prepare and Execute a formal "Purchase and Sale Agreement"
*The Purchase and Sales Agreement should include language that states the sale is contingent upon the Personal Representative obtaining the License to Sell from the court at the absolute highest price possible; that the Personal Representative’s License to Sell granted by the Court is still in effect as of the date of closing and that no higher or better offer comes in before conveyance of the real estate. This can protect the Personal Representative in the event a higher offer does comes in so that the Personal Representative can consider the better offer without risk of being sued by the original buyer, or the heirs at law.
License to Sell:
A Petition for a License to Sell allows everyone the opportunity to be heard, grievances to be aired, and protects the Personal Representative from possible personal liability if something goes wrong, by getting that “stamp” of approval from a Judge. When applying for the License to Sell real estate, the Personal Representative must have a signed Purchase and Sales Agreement from a buyer. The purchase price forms the basis for the real estate license to be issued. The following steps are required when applying for a license to sell:
- Submit the signed purchase and sales agreement to the court.
- Provide an inventory of all the estate’s assets and obtain approval of the heirs
- Include the terms of the sale, sale price, and description of the property.
Important Note: Even after a purchase and sale agreement has been signed and even if the petition to obtain a license to sell has been initiated, the estate / personal representative can and must considered any higher offers that may be received up to the closing date. In the event the Personal Representative receives any higher bona fide subsequent offers which the first Buyer cannot or will not match, all deposits made by the first Buyer should promptly be refunded. Thereafter, all obligations of the Personal Representative and the first Buyer would be voided, without recourse to the parties.
If the price is modified afterwards, the personal representative must petition the court for another license.
Information provided on this page is not legal advice and was not written by an attorney. If you are seeking legal counsel on real estate and probate , contact an experienced Massachusetts Attorney who is proficient in Real Estate Law, Elder Law, Estate Planning & Probate matters.