Re-Post: Decedent's Estates and the Sale of Real Property

We get many questions regarding the sale of real property that occurs after the title holder is deceased. For the most part, we have to follow the guidelines of our title insurance underwriters. These guidelines evolve from a combination of Kentucky case law and the KRS, as well as risk analysis and assessment. Included below is a simple outline that details the steps needed and action required when the title holder of real property is deceased.


I. Testate - Decedent had a Will. The Will must be probated.

    A. If the Will contains specific power to sell real estate (the Will must specifically mention real estate), only the Executor or the Administrator With Will Annexed (W/W/A) is needed to convey the real estate and the proceeds check shall be payable to the estate.

    B. If the Will does not give specific power to sell real estate, either:

        i. A court order allowing the Executor or the Administrator W/W/A is needed. This is set out at KRS 389A; or

        ii. The Executor/Administrator W/W/A can sign as well as all the heirs and their spouses with the proceeds check made payable to the estate. However, this option can only occur after the expiration of six (6) months from the appointment of the Executor/Administrator W/W/A. If the closing is to occur within the six (6) month period, the KRS 389A court order is needed.

II. Intestate - Decedent did not have a will.

    A. If an estate is opened and administered:

        i. The Administrator needs a KRS 389A court order allowing the estate to sell the real property, or

        ii. The Administrator can sign as well as all the heirs and their spouses with the proceeds check made payable to the estate. However, this option can only occur after the expiration of six (6) months from the appointment of the Administrator. If the closing is to occur within the six (6) month period, the KRS 389A court order is needed.

    B. If there is no probate:

        i. Record an Affidavit of Descent, and

        ii. All heirs named in Affidavit of Descent and their spouses muse sign the deed conveying the property.

        iii. There is a two (2) year wait period from the date of death before this can occur (See KRS 396.011).


Remember, these are guidelines and there may be exceptions. If you need further information we are always available.

Tenancy in Common v. Joint Tenancy

A.  TENANCY IN COMMON

    1.  Nature of the Tenancy:  Each tenant has an undivided interest in the property, including the right to possession of the whole.  when one co-tenant dies, the remaining tenants in common have no survivorship rights.  Equal shares are not necessary for tenants in common.

    2.  Alienability:  Each co-tenant can transfer his interest in the same manner as if he were the sole owner.

    3.  Presumption:  In Kentucky, a tenancy in common is presumed, unless there is language to the contrary in the vesting instrument.

B.  JOINT TENANCY

    1.  Nature of the Tenancy:  Joint tenants own an undivided share of the property and the surviving joint tenant has the right to the whole estate.  The right of survivorship is the distinctive element of a joint tenancy. 

    2.  Four Unities:  To be joint tenants, the tenants must take their interests:

        a.  At the same time

        b.  By the same instrument (title)

        c.  With identical interests

        d.  With an equal right to possess the whole property.

    3.  Creation:  A joint tenancy can be created only by express words in an instrument.  





   

Real Property Held in Trust and How it Affects A Transaction Involving That Real Property

If real property is held in trust, it is imperative to determine the validity of the trust and how it pertains to the transaction at hand.  A copy of the original trust agreement must be obtained and reviewed.  To determine if it is a valid trust for purposes of the real estate transaction, here are some things to look for:

• Name of trust

• Named trustees

• The trust is revocable

• The borrowers are the settlors and the beneficiaries of the trust

• If sale, trustee has power to sell real property and remove property from the trust

• If refinance or purchase, the real estate owned by the trust may be used as collateral for a loan

• The trustees are authorized under the trust to encumber the subject real estate

• The trust appears to be validly created and is duly existing under KY law, document is signed and notarized