The house is typically the biggest asset in a homeowner’s estate when they pass away. Family members might require or desire to quickly sell the property. Naturally, a house’s significance extends beyond its monetary worth; it could contain priceless recollections of the departed and years spent there with family. Even if it makes the most financial sense to sell the house, family members may not want to do so emotionally. As such, following a death, determining what to do with a house and when can be challenging. In our office, one question we get asked a lot is “Can I sell a house before probate?”
The short answer is, “Usually not. However, there are some significant caveats to that response, so let’s talk about what probate is, when a house needs to go through it, and the process of selling a house while it’s in probate.
When a homeowner passes away, their house often becomes the largest asset in their estate. Family members may need or want to sell the property quickly, but they may also be hesitant to do so due to the emotional attachment they have to the house. This raises the question: can a house be sold before probate?
The answer is usually not, but there are some important exceptions. This article will discuss what probate is, when a house must go through probate, and the steps involved in selling a house in probate.
What is Probate?
Probate is the legal process of administering a deceased person’s estate, paying estate debts, and distributing assets to heirs and beneficiaries. However, not all property must go through probate. Generally, probate assets are those that are solely owned in the name of the deceased.
When Does a House Have to Go Through Probate?
A house does not have to go through probate if it is:
- Jointly owned with rights of survivorship: In this case, the surviving owner automatically takes ownership of the house.
- Held in a trust: The trustee can sell or transfer the house according to the terms of the trust without any probate court involvement.
- Owned through a “ladybird deed”: This estate planning tool also prevents a house from needing to go through probate.
However, if the deed to the property is in the sole name of the deceased, it must go through probate, whether or not the decedent had a will. In that case, the house cannot be sold before probate, and there are important steps that must be taken during the probate process in order to sell the house.
How Can the Executor Sell a House That is in Probate?
If a house has to go through the probate process, the personal representative of the estate needs to follow probate court requirements in order to sell it. The personal representative is the person formally appointed by the court to manage the estate. The personal representative is sometimes referred to as the executor or administrator of the estate.
Exactly what the personal representative needs to do depends on the type of probate process the estate must go through. Smaller and more straightforward estates may be able to go through an unsupervised probate process; larger and more complex cases require supervised probate. With supervised probate, the court is more heavily involved in the process of the sale.
The personal representative of the estate may hire a real estate attorney and list the property for sale, but depending on the county in which probate is filed, the probate court may need to approve any sale of the property before it can be final. This is not necessarily the case, approval for the sale of a house varies depending on the county in which the probate is filed.
In a probate sale of real estate, the property is usually sold “as-is;” heirs or beneficiaries of the estate are often unable to do the repairs or updates that might typically be done before selling a house.
In some cases, it may be necessary to sell the house during probate in order to satisfy the debts of the estate. However, selling a house during probate often lengthens the probate process.
If you are unsure whether or not to try to sell a house during probate, you should discuss the pros and cons with an experienced probate attorney.
Selling a House in Probate if There is a Mortgage
Another issue to be aware of when selling a house in probate is whether there is a mortgage on the house, and what type of mortgage. Inheriting a house with a mortgage can complicate the sale process somewhat.
If a house has a traditional mortgage, the personal representative can sell it (with any required court permission), pay off the mortgage using the proceeds, and distribute the remaining proceeds to heirs of the estate.
If the house has a reverse mortgage, things operate a little differently. With a reverse mortgage, the homeowner remains in the home and receives a monthly payment during their lifetime, without having to make further mortgage payments themselves. When they die, the reverse mortgage must be paid off in full within a relatively short time frame. This usually necessitates selling the house. Any proceeds of the sale above and beyond what is necessary to pay off the reverse mortgage can be distributed to heirs.
If you are serving as the personal representative of the estate, you may not be immediately aware of whether there is a mortgage or reverse mortgage on the property. Your probate attorney can help you find out whether there is a mortgage and how much is owed, and decide what steps you need to take next.
One word of caution: in Michigan, if family members do not open an estate within 42 days, the nominee of a creditor can be appointed as personal representative of the estate. That means that if there is a mortgage or reverse mortgage, the mortgage holder can nominate someone to serve as personal representative and sell the house so that their debt can be satisfied. That can result in the family of the deceased losing much of the equity in the home.
If your close family member has recently died and owned a home, you should immediately consult an experienced Michigan probate attorney to discuss the situation and your options. Selling a house during probate can be complicated, and an attorney’s guidance can help the process go more smoothly, without mistakes that could lead to liability for the personal representative.
Frequently Asked Questions
Can I sell my house before probate if I am the sole heir?
Even if you are the sole heir to the estate, you cannot sell the house before probate if the house is in the deceased’s name alone. You must go through the probate process and be appointed as the personal representative of the estate before you can sell the house.
What happens if I sell the house before probate without going through the proper legal channels?
If you sell the house before probate without going through the proper legal channels, you could be held personally liable for any debts or claims against the estate. You could also face legal action from other heirs who were not involved in the sale of the house.
How long does it take to sell a house in probate?
The time it takes to sell a house in probate can vary depending on the complexity of the estate, the type of probate process, and the local probate court. In general, it can take several months to a year or more to sell a house in probate.
Additional Resources
Disclaimer
This article is for informational purposes only and should not be considered legal advice. Please consult with an experienced probate attorney in your jurisdiction for advice on your specific situation.
When Does a House Have to Go Through Probate?
The legal procedure known as “probate” is used to manage a deceased person’s estate, settle outstanding debts, and allocate assets to beneficiaries and heirs. But not all assets have to go through probate; typically, assets that are owned solely in the name of the deceased are considered probate assets.
If a house is jointly owned with rights of survivorship, the surviving owner automatically becomes the owner and the property does not need to go through probate. When a home is held in a trust, the trustee may transfer or sell it in accordance with the terms of the trust without the need for a probate court hearing. (One of the main motivations for trust creation among many individuals is to avoid probate.) Another estate planning technique that can spare a home from probate is the “ladybird deed.” If any of the aforementioned are used, the property can be sold at any moment, even if other estate assets must go through the probate process.
Regardless of whether the deceased had a will or not, the property must go through probate if the deed is solely in their name. If so, the house cannot be sold prior to probate, and in order to sell the house, certain crucial procedures need to be followed during the probate process.
How Can the Executor Sell a House That is in Probate?
In order to sell a home that must go through the probate process, the personal representative of the estate must adhere to the directives of the probate court. The individual formally designated by the court to oversee the estate is known as the personal representative. Occasionally, the executor or administrator of the estate is used to refer to the personal representative.
The specific actions required of the personal representative are contingent upon the type of probate process the estate is required to undergo. Larger and more complicated cases need supervised probate; smaller, simpler estates might be able to go through an unsupervised probate process. The court is more actively involved in the sale process when using supervised probate.
A real estate attorney may be hired by the personal representative of the estate to list the property for sale, but depending on the county where probate is filed, any sale of the property may require approval from the probate court before it can be finalized. This isn’t always the case, though, as approval for a home sale varies based on the county where the probate is filed. Real estate is typically sold “as-is” in probate proceedings because the heirs or beneficiaries are frequently unable to make the renovations or repairs that should be made before a home is sold.
In certain situations, selling the home during probate might be required to pay off the estate’s debts. However, the probate process is frequently prolonged if a house is sold during it. The back and forth in this paragraph is a little unclear to me. If you’re not sure whether to try to sell a house while it’s in probate, you should talk to an experienced probate attorney about the advantages and disadvantages.