Written by attorney Michael M. Thompson

What If Your Seller Is An Estate?

When the record owner of the subject property has died, there are three possible scenarios for the sale of the real property: closed estate, open estate or no estate. (Naturally, if there is a surviving tenant by the entirety or joint tenant, the property will pass outside the estate by operation of law).

Closed Estate

The closed estate will usually present the easiest situation, because there are no pending issues of claims against the estate, right of a spouse to claim an elective share, or joinder of the personal representative. Title has vested in the heirs or devisees, and a deed from these heirs or devisees and their spouses should be enough to convey whatever interest the decedent held. It sometimes happens in intestate cases that one or more of the heirs are a minor. If so, a guardian will need to be appointed for the minor, and the guardian will have to petition the court to sell the minor's interest.

Open Estate

The heirs or devisees may desire to sell the property prior to the close of the estate. Title to the property vests in the heirs or devisees at the date of death, subject to the power of the Personal Representative to bring the property back into the estate if necessary to pay claims or expenses. Sales more than two years after date of decedent's death are valid, even without joinder of the Personal Representative. Sales within two years of the date of death are void as to creditors unless the first notice to creditors has run in the newspaper and the Personal Representative joins in the deed. Note that the statute (GS28A-17-12) requires only that the first publication be made, not that all publications be completed.

1) Testate (Died With A Will)

If the will conveys the real property to the Executor, and the will contains an express Power of sale or incorporates the powers of GS32-27(2) by reference, the executor can sell the property without the consent or joinder of the beneficiaries and without bringing a special proceeding. These sales can be for any reason, not just for the payment of debts and claims of the estate.

If the will conveys real property to the executor but does not authorize him to sell the property (either expressly or by incorporation of GS 32-27 powers), many Clerks of Court will require that the Executor bring a motion in the estate file and obtain an order to sell the property. The sale is made under the procedures governing judicial sales (Article 29A of the General Statutes). Likewise, in the event the will directs the Executor to sell property, there is no need to obtain court approval.

Where the will devises the property to beneficiaries and does not grant an express power of sale, but does incorporate the powers of GS 32-27, the prevailing view is that the will beneficiaries must join in the deed of conveyance.

2) Intestate (Died Without A Will)

The situation in which a property owner dies without a will brings an additional challenge to the transaction: determining which person or persons inherited the property and will have to sign the deed. The laws of descent under intestate succession can be found in Sections 29-14 and 29-15 of the North Carolina General Statutes. An administration of the estate will need to be filed with the County Clerk of Superior Court utilizing much the same procedure as with a will. Said administration will list the heirs at law, publish a creditors notice and settle any inheritance tax issues.

No Estate

You may well encounter situations in which the property owner has died, but no estate file has been opened. If the decedent left a will, probate of the will is needed to pass title to the beneficiaries. Occasionally, family members will merely "file" the will, having the Clerk open an estate file with the will without probating it. In such a case, if the will beneficiaries are the same as the heirs of the decedent would be had she died intestate, you may be able to have these individuals and their spouses execute a deed to the property. Otherwise, probate of the will should be commenced. If there is no will, an administrator will need to qualify if less than two years has passed since the decedent's death in order to be able to convey free of creditors' potential claims. Administration of the estate serves the further purpose of identifying on record the heirs of the deceased. It may be that the property owner died many years ago and no estate has been administered. Depending on the circumstances, the title insurance company may be willing to insure title with affidavits of at least two disinterested persons as to the heirs and proper parties to sign the deed and contract.

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