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Probate Real Estate: What You Need to Know

Managing a probate real estate transaction takes organization, but it’s a lot easier than it looks. Knowing these particulars will help.

As a real estate professional, listing or investing in probate real estate can be an easy experience. You don’t have to worry about the technical aspects, complicated words or definitions. All you need to understand is the process.

What is probate?

Whether it’s an heir, seller or buyer, the definition of probate real estate never changes:

  • Someone owned real estate.
  • They died.
  • In order for the rightful heirs to have title to the real estate to sell/convey/transfer, the heirs have to go through this formal court process called probate to officially transfer title.
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Without probate, the heirs cannot sell/convey/transfer the real estate. This process of an attorney opening a court file, procedurally moving what the deceased had to the rightful heirs, formally transferring title, is probate. Once title is transferred, the heirs have authority to sell/convey/transfer the
real estate.

Probate real estate typically involves:

  • One house (the primary residence of the deceased).
  • One or more heirs of the decedent (spouse and/or adult children) who are motivated to sell the real estate.
  • The heirs list the property and eventually agree to a contract with a buyer.
  • The heir(s) will retain an attorney to handle the probate, or the property is already in probate.
  • The probate transfers the decedent’s title to the heirs.
  • Once the probate transfers title, the heirs collect their money distribution at the closing.
  • At the closing, real estate professionals will receive their fees, rather than having to wait until the end of the probate process.

Probate ABCs

When is probate needed? Here are some examples of when and when it’s not needed:

ONLY HUSBAND, OR WIFE, NAMED ON DEED: Deeds titled with only the husband, or with only the Wwife, and one survives the other not on title—probate is usually required. There are also major implications with the title of real estate if this occurs (spousal elections).

TENANTS IN COMMON: This occurs where there is not a husband and wife scenario (with exceptions), but more of a boyfriend/girlfriend, brother/sister, family members, business partners on the deed.  This type of deed contains no special language for automatic title transfers. Thus, if A, B, C and D are titled on the deed, with no special language, and D dies, in order to sell/convey/transfer, a probate will be required for D.

TENANCY’S BY THE ENTIRETY: In the event both husband and wife are alive, and the deed is titled in this manner, if husband dies, title to the real estate transfers over to the wife with the recording of a death certificate for husband. Therefore, no probate is needed. Wife can now sell/convey/transfer.

JOINT TENANTS WITH THE RIGHTS OF SURVIVORSHIP (“JTWROS”): A JTWROS Deed has language akin to “survival of the fittest.” Whoever is the last to live gets title to the real estate and avoids probate along the way until their own demise.

LIFE ESTATE DEED/LADY BIRD DEED:  These types of deeds have special language. Upon death, the Life Tenant title passes to remainderman, also known as the beneficiaries on the deed. No probate is required.

TRUSTS: Property titled in a Trust (Land Trust, Irrevocable Trust), usually avoids probate.  (Trust Administration issues may exist).

Managing the process

Once you’ve come upon this type of listing or you’ve been approached by the heirs or the family of the decedent, ask family members:

  • Is this the only property? If they have other properties, how many and where are they located?
  • Is there a mortgage or reverse mortgage?
  • Is anyone paying taxes?
  • Did the decedent own any commercial property?
  • Did the decedent own any vacant land?
  • Is there a will or trust? If there isn’t a will, which family members are alive?

This will help you determine how long the probate process may take and give you a clearer understanding of the process, so you can relay that information to potential buyers.

During the probate process, everyone involved can become stressed, anxious and impatient. Most want to know how long the process will take, and many don’t realize that it isn’t quick. The entire probate process from opening the estate to closing could take anywhere between six to 12 months and sometimes even longer.

The more fluid the communication you have with the Personal Representative, the more you put the heirs’ worries to rest. In the long run, the Personal Representative and family will think of you as someone who cared for them and helped them through this long process.

As Florida continues to increase in population, probate property presents a big opportunity. It helps to be familiar in this area as it becomes more than just a listing and selling opportunity. Probate property presents the unique opportunity to develop meaningful relationships with the family members. That relationship may turn into future business opportunities as well.  #

Real estate contract for probate

While there is no specific real estate contract for probate, the most widely used real estate contract in Florida is the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase (FR/Bar).

For contractual and title purposes, in order for the decedent’s primary residence to be sold to a buyer, all heirs, whomever they may be for that specific situation, must all sign the real estate contract as “Seller.”

An important reason for securing the signatures of all heirs revolves around title insurance, especially for “Homestead” property. When the heirs and buyer attend the closing, title insurance will require all heirs to execute deeds as “Seller.” Usually, if the property was not the primary residence of the decedent, some title insurance companies may allow the personal representative appointed for the estate to sign the deed at closing. However, each title insurance company is different and may have different requirements regarding heirs for probate real estate.

Alfred V. Nicoletti is an attorney at Buschman, Ahern, Persons & Bankston in Jacksonville Beach. Nicoletti was admitted to the Florida Bar in 2016 and has been practicing real estate and probate law for four years.