An estate consists of the property in an individual’s name when they die. Everything from their personal property and their vehicle to their home may be part of their estate. Some people create estate plans where they name specific beneficiaries. They can nominate the representative who administers their estate and instruct them to distribute their property in a certain way. Other times, people die without an estate plan on record. Then, state law determines who inherits from their estate.
A personal representative may need to sell a home because the decedent instructed them to do so in an estate plan. They may also need to sell a home to repay creditors or distribute its value among multiple beneficiaries.
What does a personal representative need to consider when their role requires the sale of real property?
Minimizing how long it sits vacant
The longer a property remains vacant, the greater the likelihood of damage to the property. From leaks that go unnoticed and turn into major damage to destruction caused by vagrants temporarily living at the property without permission, there are many types of damage that can occur at a property when no one lives there. The less time the property sits vacant, the less likely there is to be damage that reduces its value. Even an awareness that the home has sat vacant can sometimes drive the final sale price down.
Offering the right of first refusal
When an individual includes instructions to sell their home during estate and ministration, they sometimes also offer their family members the right of first refusal. Simply put, their beneficiaries may have the option to buy the home before anyone else makes an offer on the property. Allowing family members or beneficiaries an opportunity to acquire the property for a fair market value is often necessary when selling the home during estate administration.
Making appropriate disclosures
Becoming familiar with the condition of the property to provide appropriate disclosures is a crucial step. Disclosing known issues with the property in writing is a basic requirement during a real estate transaction. Without proper disclosures, buyers could potentially try to take legal action later when they uncover issues with the property. It may be necessary to consult with other family members or even neighbors confirm the condition of the property.
Having the right assistance when handling major assets during estate administration can maximize the return on a transaction. Personal representatives often need support if they hope to avoid legal and financial liabilities should anything go wrong with a real estate transaction during estate administration.