Can a Beneficiary Stop the Sale of a House?

For those wondering “can a beneficiary stop the sale of a house,” the short answer is this: Only if the executor is about to sell the house for less than fair market value. An executor appointed by a New York court does not have to seek approval of the beneficiaries. Once the executor is appointed by the court, the executor may act on the authority of New York State law to marshal the assets of the estate, pay debts and expenses and disburse the remainder of the estate to the rightful beneficiaries. That can include a house, bank account, stock portfolio, automobiles, and any other assets of an estate.

An executor is a fiduciary, meaning that he has a duty to exercise the utmost good faith and undivided loyalty toward the beneficiaries throughout the relationship.^[1] Does the duty to exercise “good faith and undivided loyalty” include a duty to seek approval from the beneficiaries before selling a house? An executor “must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing.” ^[2] Does the executor’s failure to seek the beneficiaries’ approval violate those principles? Probably not. Unless of course, the executor is self-dealing, which is a violation of fiduciary duty.

Selling the house for less than market value for entities controlled by the executor, or getting money “under the table” is embezzlement, or more simply, stealing.

New York Consolidated Laws, Estates, Powers and Trusts Law – EPT § 11-1.6 states that “Every fiduciary shall keep property received as fiduciary separate from his individual property.  He shall not invest or deposit such property with any corporation or other person doing business under the banking law, or with any other person or institution, in his own name, but all transactions by him affecting such property shall be in his name as fiduciary.” ^[3]

New York’s Penal Law (the Criminal Law) states that “A person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof.” ^[4]

The estate owns the house. If the executor uses the house to benefit himself at the expense of the beneficiaries, he would be committing embezzlement, which is larceny.

New York Penal Law continues to say that “Larceny includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed … by conduct heretofore defined or known as common law larceny by trespassory taking, common law larceny by trick, embezzlement, or obtaining property by false pretenses.” ^[5]

Someone who has been nominated as the executor by the will but is not yet appointed by the court do not have the power to sell a house. The law states that “an executor named in a will has no power to dispose of any part of the estate of the testator before letters testamentary or preliminary letters testamentary are granted, except to pay reasonable funeral expenses, nor to interfere with such estate in any manner other than to take such action as is necessary to preserve it. ^[6]

Can a Beneficiary stop the sale of a house? – In most cases not, but if the executor is unfairly profiting from the sale by getting money under the table or selling the house to himself for less than fair market value, then yes.

Albert Goodwin, Esq. is a New York estate, guardianship, wills, trust, Medicaid and probate lawyer, and make an appointment to discuss spousal claims and rights to the estate. He is in practice since 2008. He can be reached at (212) 233-1233.

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[1] NY EPTL § 11-1.1

[2] In re Estate of Naumoff, 301 A.D.2d 802, 803, 754 N.Y.S.2d 70 (3d Dep’t 2003)

[3] NY EPTL § 11-1.6

[4] NY PEN § 155.05

[5] NY PEN § 155.05

[6] NY EPTL § 11-1.3