By Rachel Puryear, Consulting Attorney and Realtor with Berkshire Hathaway, (DRE 02099554)

Losing a loved one is always very hard. In the midst of grief, dealing with all of the administrative matters that come along with a death can be overwhelming. Having the right kind of professionals assisting you with all the tasks to be done, however, can ease a lot of extra stress during a difficult time.

If a loved one died and you are likely to be the personal representative to their estate (you are a surviving spouse/partner, child, parent, sibling, or someone the person named in their will to represent their estate); professional help with managing the legal and administrative matters can be quite helpful. If your loved one owned a home and their estate is subject to probate, selling such a home is not like most other home sales. This post will focus on selling homes out of estates which are subject to probate.

Wait a minute – what is probate, anyway?

Probate is a court proceeding where a judge supervises how a deceased person’s assets and belongings (their estate) gets distributed to their surviving family members and other heirs.

A decedent’s estate is subject to probate where the decedent either: (1) Did not have a formal estate plan (such as a valid will), or (2) The decedent had assets with a combined value of over $150K, and which were not exempt from probate. Assets exempt probate include those in a trust, or payable on death accounts, for example.

The vast majority of homeowners in California would have estates worth over $150K, due to home values in most of the state. The $150K value threshold is calculated irrespective of mortgages – so an estate which includes house worth $500K, where that house has a $400K mortgage on it, would meet the threshold.

When a deceased person’s estate must go through a probate proceeding, and the deceased person owned a home; selling that home is different than a regular home sale. This is because the sale of a home in probate is subject to the scrutiny of a judge. Here are some tips for folks needing to sell an inherited home, particularly in a probate proceeding:

Order Death Certificates Right Away, and Contact the Mortgage Servicer to Keep the Mortgage Current:

You will need to order several copies of your loved one’s death certificate right away. You will need these for many things, including handling any deed of trust (mortgage) on your loved one’s house. The mortgage must continue to be paid, to avoid foreclosure. Taxes and insurance must also be paid, if they are not included in the mortgage payments.

As you are checking your loved one’s mail, look for mortgage statements – once you find it, contact the mortgage servicer and inform them of your loved one’s death, and make arrangements to continue paying the mortgage.

If making the mortgage payments would be a hardship for you, ask the servicer about loss mitigation (also sometimes called “home retention”, or similar). Federal laws require the servicer to work with a borrower to avoid foreclosure, and present you with options (like forbearance, or loan modification).

Note: Avoid “loan modification” companies, as these are usually ripoffs – they charge a lot of money for something people can usually easily do just as well for themselves.

Check Your Loved One’s Estate Plan, and Take Appropriate Steps Accordingly:

If your loved one did any kind of formal estate planning, it is important to find their will and/or trust. If there is no such document (many people never get around to making one), state law will govern how the estate gets distributed, as well as who will manage the estate. If the deceased person owned a house in California, and it is subject to probate proceedings (this is most likely the case if it’s not in a trust, and there is not another owner with survivorship rights); it is important to start probate proceedings quickly, and get appointed as the personal representative of the estate.

Note: Even if a will appoints a person as the executor of the estate, a judge must still approve this in a court hearing. Therefore, one is not yet the personal representative of the estate until this happens.

Look After the House – Within the Bounds of Probate Laws:

Until you are appointed personal representative of the estate by a court (which happens following filing a probate petition), you may not legally take any action with the estate – this includes not selling the home, but also not making repairs or upgrades, or removing any belongings from the home. You may, however, take action to protect the estate assets – like bringing in mail, winterizing, maintenance, and so forth. This makes filing the probate petition timely all the more important.

Note: The level of court supervision over a probate sale where the deceased person left a will, is generally much less than where there is no will. Therefore, if there is no will, be prepared for a much longer and more court-supervised ride through the probate process.

Hire Professionals Who Can Help Make the Process Easier and Smoother, and Soon:

My team can offer you a rare combination of both experience with real estate brokerage, as well as a legal background in managing estates. If you or someone you know is in a position of needing to sell an inherited home, make life easier during a tough time, and reach out to me for help.

Thank you for reading, following, and sharing. Your referrals are always greatly appreciated!

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