The time for an executor to sell a house generally depends on state laws and a number of factors such as the size of the estate, the number of heirs or beneficiaries, the amount of debt owed by the estate, the existence of a will contest, and the presence of tax issues. There usually is no set time, but it is preferred to sell the house before probate closes. There is, however, a general procedure observed by an executor in selling a house.
Considerations in the sale of a house by the executor
The executor, even if named in the will, must be appointed by the court. The executor cannot manage or sell any estate asset until the court issues the executor’s letters testamentary. This can take anytime between 4 weeks to a year, depending on whether the will is being contested.
The sale of the house also depends on whether the executor was granted absolute discretion or limited in the management of the estate. If the executor was granted absolute discretion by the will and the court, the executor can sell the house without court approval similar to a normal real estate transaction. Beneficiaries, however, can object to the accounting and can hold the executor liable for surcharge in case the executor sells the house for a price below its market value. In some New York courts, such as in Brooklyn, the contract needs to be approved by the courts before the executor sells the house. This is done for both the executor’s and beneficiaries’ protection.
Payment of ongoing obligations
The executor has to continuously pay the mortgage and other debts using estate funds, loans, or personal funds. Otherwise, the bank can foreclose on the house. The executor can also discuss with the lender to postpone foreclosure until the house is sold. If the house was specifically devised to a beneficiary and the house still had a remaining mortgage debt, the beneficiary can either sell the house to pay off the remaining mortgage or assume the debt. The executor can also file an injunction to prevent foreclosure proceedings while the house is listed for sale.
Seven-month creditor claim period
In New York, creditors have only seven (7) months from the time the court issues letters testamentary to file a claim against the estate. Even if the house is sold prior to the lapse of the 7-month period, it is prudent for the executor to keep the proceeds of the sale in the estate bank account in order to ensure that there are funds available in case a claim is made during this time. After this period, the executor is no longer liable for claims of creditors and can thereafter confidently distribute the proceeds to the beneficiaries without fear of liability.
Procedure in selling a house by the executor
To sell a house, the executor must be appointed by the court; find a buyer; get a contract from the buyer; have an attorney draft the Executor’s Deed; sign the Executor’s Deed and have it notarized; receive the payment for the house; have the buyer file the deed with the city; and deposit the funds into the estate account.
Although the executor has several options when selling a house under probate, he is obligated, as fiduciary, to get the highest price possible in order to maximize the profit for the beneficiaries. For this reason, the best option is always to list the house for sale to know and get the best price in the market. The executor can also sell house to his relative or beneficiary, but all the beneficiaries must consent to the sale and the price in order to ensure that there is no risk that the executor would not be liable for surcharge.
If you are a beneficiary who believes that it’s taking the executor too long to sell the house, or if you are an executor who is looking for an estate attorney to help you sell a house, we at the Law Offices of Albert Goodwin are here for you. You can call us at at 1-800-600-8267 or email at email@example.com