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

August 8, 2012 Davis Law Group

[dropcap4 variation=”red”]M[/dropcap4]y last blog post focused on how title to real estate passes after death of the property owner.  This post will focus on the power to sell real estate after death.  The main issue related to the sale of the decedent’s real estate is whether the Executor of the estate possesses the power to sell or the authority to sell.  The source of the power will typically be either express or implied.

As I stated in Part One, the Administrator of an intestate estate (without a will) does not possess the power to sell real estate.  The only way to sell the real estate is to petition the court or by full agreement of the heirs.  As you may guess, agreement of the heirs frequently becomes a problem.  If there are multiple heirs, they must all agree to sell the property.  This would require each heir to sign the real estate contract and all documents related to the closing of the transaction.  This can create problems if there are heirs in various parts of the country – or, even worse, if the heirs do not all agree.

Intestate estates frequently cause tension and family disputes.  However, you can easily prevent this problem by setting up an estate plan.  With a little planning you can leave a legacy that helps your loved ones carry out your wishes.

If you already have an estate plan, or considering setting one up, then you should decide whether to give your Executor the power or authority to sell your real estate.  It is important to remember that your Executor does not automatically have power over your real estate; you must give this power.

Your will can be drafted so that it directs the Executor to sell your property.  This creates a mandatory power that the Executor must follow.  Typically, you would create this mandatory power if you want your beneficiaries to split the proceeds from the sale.  Giving your Executor mandatory power can also prevent conflicts and fighting between your beneficiaries.

If your will merely grants power to your Executor over the real estate, but does not direct its sale, then the power is discretionary.    This leaves your Executor the judgment to determine whether to sell the real estate.  The Supreme Court of Virginia stated in Virginia Trust Co. v. Evans that “the right to sell is used in the sense of doing that which is proper or correct, in adherence to duty and necessity.”  Discretionary power will allow the Executor to determine what may be in the best interest of the estate and take the necessary action.

The biggest thing to take away from this is that words matter; and equally important, the absence of words matter.  How do you create the right estate plan and leave the legacy you desire?  With the correct words.

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