What the listing agent should look out for when the most recent owner of the property is deceased
The following is a fictional (but very plausible) conversation between Betty Broker and Larry Lawyer:
BETTY: Larry, I have a question for you on listing a property that belonged to John Johnson, who died a month ago.
John’s daughter Annie, and her husband Bobby, came to my office to list the property for sale. When I look up the property in the tax records and the Register of Deeds, everything says the property is still owned by John Johnson and wife, Doris Johnson. I know Doris died three years ago, so I assume John fully owned the property at the time of his death.
What do I need to look out for? I do have a copy of John’s will, which was filed with the Clerk of Court.
LARRY: Well, I am glad you called before listing the property under the name of John Johnson or the Estate of John Johnson—a common mistake many agents make. North Carolina law makes it clear that upon the death of a property owner, title to the property immediately vests in either the heirs of the decedent or the devisees named in the will of the decedent. It is never correct to list an owner as “Estate of _________.” Did you get a chance to see in the will how John Johnson left his property?
BETTY: Yes, he left the property to Annie and her brother and sister in equal shares. Also, Annie said she was sworn in at the courthouse as Executor of the Estate. By the way, I feel so nosy reading the will. Should I feel that way?
LARRY: Sounds like a lot of good progress is being made. As a prospective listing agent, you should absolutely ask to see and read the will to determine who owns the property. If you don’t understand the will or it makes a complicated devise, you will probably need to get some attorney help to determine who needs to sign the listing agreement and later the contract.
BETTY: Just out of curiosity, what would have happened if John had not had a will?
LARRY: Great question. As you remember from Real Estate School, when someone dies without a will, it is referred to as dying “intestate.” North Carolina, and all states for that matter, have statutes with a detailed menu of how property is distributed when someone dies without a will.
In this case, John was not survived by a spouse but was survived by his three children. Therefore, the children take the property in equal shares. If the property was in John’s name alone, and he had been survived by his spouse, the spouse would receive part of his property, and the children would receive the rest. If John died without being survived by a spouse or children, things really get complicated, and you would need the input of an attorney to help you navigate the distribution scheme set forth in the Intestate Succession Act.
BETTY: Interesting!! Ok, what do we do next?
LARRY: Since the will was submitted to the Clerk and Annie has qualified as Executor, we now need to work on getting all three siblings to sign the Listing Agreement. Also, don’t forget that the spouses of each child here must also sign the Offer to Purchase and Contract when you find a buyer since they have a marital interest in the property.
Finally, since we are dealing with a not yet fully-administered estate, Annie Smith will have to sign as an individual owner and as Executor of the Estate. Her signature lines on the Listing Agreement, Contract and the Deed conveying title will be “Annie Smith, individually and as Executor of the Estate of John Johnson.”
BETTY: But Annie says that since she is the Executor, her siblings have told her that they want her to take care of everything. Do we really need to involve her brother and sister in this?
LARRY: This is where it all gets dicey. It all depends on what the will says. Typically, wills are written to leave the property in equal shares to the surviving children. However, it is possible to have a will that directly devises the property to the Executor with specific instructions to sell the property and then distribute the proceeds in a certain way. Unless the will specifically devised the property to the Executor with a directive to sell, all of the children need to be involved. Involvement by all children will be the rule the vast majority of the time.
BETTY: So, I guess I’m stuck with dealing with all three siblings. Can the two out-of-town siblings give Annie a power of attorney to sign things for them? (Disclosures, contracts, etc.)
LARRY: Absolutely, that would probably be the most efficient way to handle this.
BETTY: Th is is a great property and will probably sell quickly. What else do I need to look out for?
LARRY: Hopefully, Annie has an estates attorney helping her with the estate, since she already filed the will with the Clerk and qualified as John’s Executor. Now she needs to publish a Notice to Creditors in a local newspaper. The law requires at least one publication of a Notice to Creditors before the property can be transferred out of an open estate. Also, if John’s creditors have fi led any claims in the estate file, these may need to be paid at the closing if not before.
BETTY: Do any of these requirements make the closing more expensive for the sellers since the property is coming out of an estate?
LARRY: In most cases, yes. Th e closing attorney has to report the status of the estate administration to the title insurance company and will be required by the title insurance company to obtain certain affidavits from the Executor that are not needed in a conventional closing. Because of this, the seller should expect the seller fees to be higher than normal.
BETTY: Thanks, Larry. I have made a lot of notes about this, but I will probably call you a few more times to make sure I handle this correctly.
LARRY: Glad to help and good luck with your new listing!
RESOLVE:
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CATCH RICK POE ON MOBILE MONDAYS IN MARCH
Want to hear more or ask your own questions? You’re in luck—it’s our Mobile Monday’s topic in March! Learn everything you need to know about listing and selling properties of recently deceased owners from Rick Poe on Monday, March 2. Catch the presentation live at 1 p.m., or watch the video recording later. Join the group at facebook.com/groups/ncrmobilemondays.
