Owner passed away, properties tied up in court

[Rich S.]

Good day BP Family.  I have had my eye on a property that is in disrepair and needs a LOT of work, clean out etc.  I had been in conversation with the family prior to the owner passing to let them know I would be interested and they wouldn't have to touch/clean out a thing.  They could leave everything as is.  Right now the property is tied up due to nursing home care for a spouse from a few years ago who was on Medicaid or something to that affect.  Anyone have experience with how that process goes?  Is there a way to approach them with an offer to get release that hold, lien, etc?  We are on year two of the property sitting empty and deteriorating further so was curious what kind of timelines on some of this stuff.  Just wondering if there is still hope for this property or not.

Thanks for any help.

[Rick H.]

You are asking, can the PR (person-in-charge, executor, administrator, etc.) transfer title during probate without paying certain unsecured creditors?

Technically, yes. 

However, legally the PR has the fiduciary duty to settle all claims, secured and unsecured or risk court sanctions or worse from an unpaid creditor or claimant.

So, in practice, counsel for the PR should require settlement of creditor claims, particularly those for medical benefits. 

Depending on the state (and local rules of court) it MAY be possible to purchase real estate subject to a secured creditor such as a mortgage lienholder.

Ultimately, if a sale is subject to court confirmation, judge will expect PR to either list property for max market exposure and have provided for all creditor's to be accommodated and satisfied, absent a written compromise agreement for less.