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Frequently Asked Questions
When a person dies, he either has a will (“testate”) or not (“Intestate”). If he has no will, the state where he died chooses an administrator to disburse his assets. If he has residences or properties in multiple states, multiple probates will need to be completed. Beneficiaries can contest a will but have less legal status with intestate probates.
Letters Testamentary are the legal document issued by the probate court that designates who has the authority to sell the assets of the estate. These are often referred to as the Designation of Trustee or Executor. In the case of an intestate probate, the judge will designate a court-appointed individual.
It is very common for a family member or tenant to occupy the property of the decedent. The property can be sold with these individuals living in the property. However, most investors request a substantial discount for the dilemma. Try to negotiate a compromise to get them out of the eviction process if they have no written lease.
Fraud in a probate case is not uncommon. An investor would always use a title company to purchase a probate property, so they have title insurance if the probate is later challenged. This is most common where a beneficiary claims to be the only living relative and the probate is adjudicated on that premise. Later, a relative comes forward and has a claim that should have been presented to the court originally. Get title insurance to cover this potentially expensive problem.
The probate court evaluates probate properties in one of several ways. First, the judge may require an appraisal, he may expect the buyer’s purchase contract price based on comparable sales in the area and the repairs needed, and he may request that the property be listed on the MLS® to see what happens.
A Notice of Proposed Action is a court-generated document sent to each bona fide or proposed beneficiary that notifies them of the pending sale of an asset, usually real property. If one of the recipients objects, the probate process has to be put on hold until the issue can be resolved. Objections are common, and this is the reason for understanding how a “Partition” works.
Probate properties going to auction are rare and usually have a foreclosure associated with them. They are not considered ‘special’ from the auctioneer’s standpoint, so if you decide to bid on them, be ready to pay cash when the property closes. This may take some time to complete the probate process, but it should not be unreasonable.
We have encountered this, and the court has rejected assignments and novations because the buyer’s name was not in the court-issued order to sell the property. You will need to double close using transactional funding to purchase and sell the property.
Probate referees are usually associated with intestate probates. He is a court-appointed individual who establishes a sale price for the property. If beneficiaries exist, they do have the right to contest his evaluation.
You have the right to sign a purchase contract with the Trustee or Personal Representative of the estate and move forward to the closing. The property doesn’t have to be listed on the MLS® or publicly advertised before a contract is signed. The probate judge has the final authority to accept or reject this contract if he believes it is below market value or a ‘sweetheart deal’ with the buyer.
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