Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
Finally got the owners of a property to sell. It's 4 brothers who are the heirs. The parent have been deceased for many years, but the brothers kept paying the taxes and insurance. Deed is still in parents name.
However, I don't believe the property went through probate because the home was paid off. On my contract do I put the seller as "the estate of" and then let the title company do the rest?
@dave t My understanding is that in Georgia if the only surviving members are the children of the deceased, is does not have to go to probate, but you must go through the legal process of first transferring title to the children. We are working on helping them find a suitable lawyer to do this first.
Kevin: Be careful about transferring that property to the four brothers via a simpler affidavit process. While it may be faster and cheaper, it increases potential title issues. It means when you go to close your purchase and get clear title, you're looking at possible tax liens and credit card judgments and child support judgments and BK filings etc against 4 people. In some cases, it makes more sense to bypass heirs and buy from the estate. You really have to know what you are dealing with when it comes the heirs' issues and debt versus the estate's issues and debt.
I'd be checking public records on all of four of them before I sent them to an attorney. Just saying.
Try this for some ideas at least. And yes one of them was just get it under contract and the title company will tell the seller what they need for a clear title.
Each State can have different probate laws so it might be best to consult an attorney in your area or talk to the people in your jurisdiction that handle probate. In my area if there is no Will, the State dictates who the property goes to: Spouse > living children > children of deceased children > siblings and so on. Also in my State after 3 years the family can not file for probate any longer. The case has to go before a judge.
Having said all that, I agree get it under contract. However, I wonder if it is a valid contract because the personal representative, at least at the time of the signing, is not signing the contract.
They need a probate attorney to file whatever paperwork is required by that state.
Just let the attorney sort it out; it's a legal matter. If they don't have any money, find an attorney that will agree to be paid at closing. It will come out of THEIR proceeds. They do it all the time.
Sharon Vornholt good suggestion.
I've since spoken to them and mentioned this and they for some reason are a little antsy now, but it's a great home and just down the street from another house we did with exact same layout so we could reuse the same blueprints.
Kevin Polite - They probably know something you don't know. Maybe their are liens against the house, back taxes owed or they know the title isn't clear.
I would send them a handwritten thank you note for letting you see the property. Tell them again you are interested in buying the property and include another business card.
Then mention that you know that they probably don't know much about this property or if everything has been taken care of with regards to being able to sell the property. Let them know that if any title issues show up when the title is run like back taxes etc. they can all be cleared up easily by the attorney.
I have done this many times. These types of things will also just come out of their proceeds. Sometimes I adjust my offer and just say I will pay all of those things for them. What they really want to know is "how much will I net".
The important thing here is that the deceased parents still own the house. The surviving next of kin can not legally transfer title -- they are not the legal owners of the property. The property has to go through probate first, then the probate court action will transfer title from the parents to the legal heirs.
Once the heirs have legal ownership, they can close a sale.
BTW: Probate has nothing to do with the presence or absence of a mortgage loan. Probate is the only way title to real estate can be transferred to heirs when the owners are deceased and unable to sign a transfer deed.
@dave t My understanding is that in Georgia if the only surviving members are the children of the deceased, is does not have to go to probate, but you must go through the legal process of first transferring title to the children. We are working on helping them find a suitable lawyer to do this first.
@dave t My understanding is that in Georgia if the only surviving members are the children of the deceased, is does not have to go to probate, but you must go through the legal process of first transferring title to the children. We are working on helping them find a suitable lawyer to do this first.
Kevin: Be careful about transferring that property to the four brothers via a simpler affidavit process. While it may be faster and cheaper, it increases potential title issues. It means when you go to close your purchase and get clear title, you're looking at possible tax liens and credit card judgments and child support judgments and BK filings etc against 4 people. In some cases, it makes more sense to bypass heirs and buy from the estate. You really have to know what you are dealing with when it comes the heirs' issues and debt versus the estate's issues and debt.
I'd be checking public records on all of four of them before I sent them to an attorney. Just saying.
In what cases would it make more sense to bypass the heirs and buy from the estate?
I ask, because I am doing a similar deal right now where my attorney is saying we need to take care of the probate issues via affidavit and then I will will take title subject to any other title issues. In my case, there are back taxes (which are the impetus for the sale), one of the heirs has a judgement, and there is a thirty year mortgage recorded in 1974 that does not have a record of cancellation. I am planning on paying the taxes and the judgement in addition to a cash payment to the heirs. My attorney says worst case is we have to do a quiet title action to take care of the mortgage. With this limited information do you see any red flags here?
You are always dealing with the executor or PR; that is the person that has the authority to sell. And in my area, there will always be an attorney involved. Either the one they are using, or mine.
The heirs unless they are also the executors, are the beneficiaries of this probate process. They can't sell the property, because they have no legal standing.
Just listen to your attorney. He will deal with the executor(s) and get it done.
Some states have affidavits or heirship affidavits that do not go through the courts. They are recorded docs that transfer real property to heirs. In these cases there is no probate nor any PR or exec. I believe GA, where the OP is, is one of these states. My only caution is to make sure the OP and attorney look at the whole picture, which includes evaluating whether to probate the estate or transfer it via an affidavit. Buying from multiple heirs, as opposed to buying from the estate, can be a deal breaker.
Gary Parker Your question about going into contract with heirs as opposed to a court appointed exec or PR is a good one. I haven't done that ever since I was told years ago by title and by attorneys that heirs signing a contracta is considered an illusory contract. They do not have RE to sell so they cannot legally go into contract to sell the RE. They do have an interest in the estate however. And their interest is sell-able. Now I buy the heir's interest so that I can be the exec/PR, or the bene, or both.
I'm not looking to create another debate however, to be clear, buying pre-probate deals is not for the faint of heart, a least in my state (CA) where the heirs run wild and attorneys are permitted to roam the streets without adult supervision.
It's certainly possible to purchase a property from an estate with title insurance, and its possible to buy the heirs' interests, but they are not at all the same thing. Our probate code states that title to decedent's property passes immediately upon death of the decedent, subject to the administration of the estate (I.e., the paperwork being completed).
The problem with buying an heir's interest us that its always a pig-in-a-poke deal. You're purchasing their equitable interest which may be very different than the equity in the property. And, you still haven't acquired title!
The challenge is: how do you acquire marketable title at a price point or terms acceptable to you and sellers (heirs) whereby you can get a deal that you can live with without too much concern that others will see the deal as too one-sided and try to unwind it later. The problem with becoming the PR yourself is that it comes with all of the fiduciary responsibilities. There's nothing like working your butt off to put a deal with short drop dead date only to have someone second-guess you after the pressure is off.
Consequently, I look for other ways to work deals too. Plays that permit me to make a good profit but by adding value in some way other than purchasing heirs' interests or by slowing the process down, or buying the pizza 'one-slice-at-a-time.' It pays to have good tools.
Hey Rick can you share with us some of the ways that, as you say-"Plays that permit me to make a good profit but by adding value in some way other than purchasing heirs' interests "
Original post does not say whether there was a will or no will. But I am assuming there is enough value in the estate that probate is required because title was not held in a manner to avoid probate. If there is a will the probable players are known. If there is no will read the states laws on intestacy and find out who the players can be. I don't know Georgia's laws but in several states I dealt in just about anyone can petition to open probate to get the ball rolling and they are not required to become the executor, the court will decide that. And if there is no will the court will appoint an administrator.
What i did in one case was get an option to buy signed by all the known heirs, to purchase any and all of any share of any real estate that anyone of the signatories was entitled to. It gave me control while getting things straighted out. So I was contracting with all the known potential heirs not the estate at that point.
I know I should have my coffee before I do anything. I said OP didn't say if there was a will or not and then when I hit post I read the title and no will. So anything I say before noon should be suspect.
I'm not looking to create another debate however, to be clear, buying pre-probate deals is not for the faint of heart, a least in my state (CA) where the heirs run wild and attorneys are permitted to roam the streets without adult supervision.
Hi Rick. I doubt you could trigger a debate about pre-probate deals here on BP. Every time I bring it up, I feel I eliminate some potential competition. Too tedious, too cash intensive, too many lawyer hours, can take a long time to acquire title..... I could go on. :)