The Transfer of Title and Sale of Real Estate after Death — PART ONE

[dropcap4 variation="red"]T[/dropcap4]he transfer of real estate at death can be a confusing and frustrating process.  Often times the heirs and beneficiaries of the decedent’s estate are left with numerous questions:

  • How does the real estate pass to heirs or
    beneficiaries?
  • Is the real estate an asset of the estate?
  • Is the mortgage a debt of the estate?
  • How do I acquire title to the real estate?
  • Who can sell the real estate?
  • When and how can I sell the real estate?

Many of these questions can be resolved prior to death with proper planning, but all too often this is not the case.  Even with an estate plan in place there can be confusion as to the proper process for selling or transferring real estate.  Whether the decedent died with or without a will affects how the transfer of the real estate takes place after death and whether the personal representative has title to the property or the power to sell the property.  This subject has been at the center of much litigation and entails plenty of case law.  So, in an attempt to hold your attention I will focus on the transfer of title in this post and go into more detail of the sale of real estate after death in my next post, “Part Two”

Intestacy.  If the decedent dies without a will (intestate), then according to Virginia Code § 64.2-200 (previously, Va. Code § 64.1-1) the real estate passes directly to the heirs at law.  The Administrator of the estate does not have title to the real estate or the power to sell it.  The sale of the real estate can be accomplished in two manners: (1) Petition the court, or (2) Agreement of the heirs.  I will go into more detail about this next time in “Part Two”.

Testate.  If the decedent dies with a will (testate), then the will may vest title in the Executor and give power for the Executor to sell the real estate.  However, the Executor’s power is not always clear cut.  The nature of the Executor’s power depends upon the precise language in the will.  The language in the will dictates whether the Executor or the beneficiaries (devisees) take title to the real estate.

The language in the will likely gives the Executor either a “naked power of sale” or “superadded power of sale”.  The Supreme Court of Virginia does a great job making this distinction in Stark v. City of Norfolk.  If the will merely grants discretionary power (“naked power of sale”) for the Executor to sell the real estate, then the title goes to the beneficiaries unless the Executor exercises his power to sell the property.  BUT, a discretionary power of sale does not give the Executor absolute discretion.  So this begs the questions: when is the Executor able to exercise this discretion?  Wait and see in “Part Two”.

The superadded power of sale is very distinct from the naked power of sale.  If the will contains a superadded power of sale then title to the real estate vests directly in the Executor, not the beneficiaries.  The superadded power of sale typically occurs in two situations: (1) the will specifically directs the Executor to sell the property, or (2) the will contains some sort of testamentary purpose or duty that requires the title to vest in the Executor.  In “Part Two” I will take a closer look at what type of language is required to give the Executor absolute power over the real estate.

Whether your will should contain discretionary or absolute power over the real estate depends on your specific circumstances and desires.  An experienced estate planning attorney will listen to your needs and craft solutions that are specific to you and your family.

UPDATE:  See my new post entitled "Transfer and Sale of Real Estate after Death – the Basics" by clicking HERE