When a homeowner passes away, their house often becomes the most significant asset in their estate. Family members might feel the need or desire to sell the property quickly. Beyond its financial worth, a house can be rich with sentimental value, holding cherished memories of the deceased and family moments. This emotional attachment can make the decision to sell challenging, even if it’s financially advisable. Consequently, determining what to do with the property and when to act can be complex. One common question we receive is, “Can I sell a house before probate?”

The simple answer is, “Usually not.” However, there are important exceptions to this rule. Let’s explore what probate entails, when a house must go through probate, and what’s involved in selling a property during this process.

Understanding Probate

Probate is the legal procedure for managing and distributing the estate of a deceased individual. After someone passes away, their assets, including real estate, must be assessed, any estate taxes and debts settled, and then the remaining assets distributed to beneficiaries. This distribution is carried out according to the deceased’s wishes as outlined in their will, or, if there is no will, according to the rules of intestacy.

The individuals responsible for managing the estate are collectively known as personal representatives (PRs). If a will is present, these PRs are referred to as executors.

Any property owned by the deceased, such as a house, apartment, or land, is part of their estate. Property held as ‘joint tenants’ will automatically transfer to the surviving joint tenant and will not be distributed through the deceased’s will. However, property held solely or as ‘tenants in common’ (where each person has a defined share, such as 50% each) will be distributed according to the deceased’s will. If the deceased was the sole owner of the property, a grant of probate is generally required for its transfer or sale; this may not be necessary if the property was held by a surviving tenant in common.

It’s important to recognize that the probate process can take several months, or even years, depending on the complexity of the estate and any potential disputes.

Can A House Be Sold Before Probate Is Granted?

If a house must go through the probate process, the personal representative of the estate is responsible for following court requirements to sell the property. This representative, formally appointed by the court, is sometimes called the executor or administrator of the estate.

The specific steps the personal representative needs to take depend on the type of probate process the estate is undergoing. Simpler estates may qualify for an unsupervised probate process, while more complex or larger estates require supervised probate, where the court has greater oversight of the sale.

The personal representative can hire a real estate attorney and list the property for sale, but in some counties, the probate court must approve the sale before it can be finalized. This requirement varies by county. Typically, in a probate sale, the property is sold “as-is,” meaning that heirs or beneficiaries usually cannot make repairs or updates before the sale.

In certain situations, selling the house during probate may be necessary to settle estate debts. However, selling a property during probate can often extend the length of the probate process. If you’re uncertain about whether to sell a house during probate, it’s advisable to consult with an experienced probate attorney to weigh the benefits and drawbacks.

Selling a House during probate if there is a Mortgage

When selling a house in probate, it’s important to consider whether there is a mortgage on the property and what type of mortgage it is. Inheriting a house with a mortgage can add complexity to the sale process.

For a house with a traditional mortgage, the personal representative can sell the property (with any necessary court approval), use the sale proceeds to pay off the mortgage, and distribute the remaining funds to the estate’s heirs.

In the case of a reverse mortgage, the process differs. A reverse mortgage allows the homeowner to remain in the home and receive monthly payments without making further mortgage payments. Upon the homeowner’s death, the reverse mortgage must be repaid in full within a relatively short period, often requiring the sale of the house. Any sale proceeds exceeding the amount needed to settle the reverse mortgage can be distributed to the heirs.

As the personal representative of the estate, you might not immediately know whether the property has a mortgage or reverse mortgage. Your probate attorney can assist in determining the existence and amount of any mortgage and guide you on the necessary steps to take.

How Do Probate Home Sales Work?

A probate court supervises the sale of property during probate and manages the associated legal proceedings. The specific legal requirements for probate sales can vary by state. Understanding how probate sales work will help you navigate the process effectively.

Here are the key steps and details involved in the probate process:

Identifying Creditors: Before the property is listed for sale, all creditors must be identified. This includes mortgage lenders, contractors, credit card companies, and anyone else owed money by the deceased.

Appointing Administrators: The court appoints an individual to manage the property sale. This person is known as the administrator if there was no will; if a will exists, they are referred to as the executor (or “personal representative” according to state law). The administrator handles the proceeds from the sale, paying off creditors and distributing any remaining funds to beneficiaries or heirs.

Listing the Property: A real estate agent will list the property and show it to potential buyers. The property’s listing price is set, and offers are collected.

Reviewing Offers: The final bid must be approved by the probate court. The approval process can vary; in some cases, it may resemble an auction. If you’re uncertain about your role in this process, consulting a knowledgeable probate attorney can be very beneficial. The sale is finalized once it receives court approval in probate court.

What sets probate sales apart from standard home sales?

Houses in probate are marketed much like traditional real estate properties, with a real estate agent working to facilitate the sale. However, there are several key differences between probate sales and regular home sales:

Properties Are Sold As-Is
One major distinction is that probate properties are sold as-is. This means the home is sold in its current condition, which could involve significant repair costs. It’s crucial to have a home inspection to assess the property’s condition and anticipate potential renovation expenses. Additionally, homes sold as-is typically come with no contingencies.

The Process May Take Longer
The probate sale process can be notably longer and more complex. Unlike regular home sales, probate transactions are supervised by the court and involve estate administrators and heirs throughout the process. It’s not uncommon for a probate sale to take a year or more to complete.

Bottomline

Selling a house in probate involves a complex legal process that requires careful navigation. Understanding the roles of the estate, probate, and the executor is crucial. The probate court’s supervision ensures transparency and legality, protecting the interests of heirs and creditors. Executors must follow specific steps, from obtaining an appraisal and listing the home to securing a license to sell and maintain the property.

If you’re planning on selling your property during probate and don’t want to make repairs, reach out to Illinois Real Estate Buyers to get your no obligation cash offer today.