Here are a few quick tips that can help the listing agent ensure a smooth closing when the Seller is an Estate:
First Tip: A listing agent may wish to confirm that the individual representing the Estate, in fact has the legal authority to do so. In other words, have they obtained Letters Testamentary or Letters of Administration from the New York State Surrogate’s Court? Technically speaking, until Letters are issued, the individual does not have the authority to sign a Contract of Sale or otherwise bind the Estate, even if they are named as Executor in the Last Will and Testament.
By way of background, after a person dies, their attorney often helps the family probate the decedent’s Last Will and Testament (“Will” for short). The Will typically designates an individual (or individuals) who are authorized to represent the Estate. This person is called the Executor. During the probate process, the attorney submits the Will to the Surrogate’s Court, the decedent’s heirs are notified and, generally speaking, if there are no objections, the Court will issue Letters Testamentary, officially giving the Executor the legal authority to act on behalf of the Estate.
If a person dies intestate (or without a Will), then the next of kin can apply for Letters of Administration. Once the Court issues the Letters of Administration, the Estate’s Administrator will have the same legal authority as an Executor would to sign the Contract of Sale, and any other legally binding document on behalf of the Estate.
Second Tip: A listing agent can ask whether the Letters Testamentary or Letters of Administration are current? Letters Testamentary and Letters of Administration generally have a six-month shelf life. The Letters must be periodically renewed. If the property sits on the market for a while, then it may be a good idea to check with the Estate’s attorney to ensure that the Letters are current. Renewing Letters is a routine ministerial task, but depending on the County, it can take some time.
Third Tip: Has the Estate obtained an Estate Tax Lien Release? The State imposes a statutory tax lien on all estates upon death. The State releases the lien once the Estate’s taxes have been paid or a return has been filed demonstrating that no tax is due. This issue, if not properly addressed can delay closing. Therefore, the listing agent may advise the Estate’s representative to check with their attorney to ensure that the Estate Tax Lien Release is being addressed.
Fourth Tip: Is the Executor available to sign closing documents in person? Remote closings have become very common since the pandemic. To facilitate remote closings, Sellers often sign the closing documents in advance and/or give a Power of Attorney to their legal counsel. However, under New York State law, Executors cannot give Powers of Attorney. Therefore, if you have an Executor and they are not local, you may need to help coordinate the execution of the closing documents to avoid a delayed closing.
Fifth Tip: If the Seller is an Estate and items of personal property, such as chandeliers or furniture are included in the sale, then it may be prudent to advise the Estate’s representative to check with their attorney to ensure that no inclusions have been devised as a specific bequest in the Seller’s Last Will and Testament. In other words, if Aunty Sally left the dining room chandelier to her niece in Aunt Sally’s Will, the dining room chandelier cannot be included in the sale. In some cases, the attorney handling the real estate transaction may be different than the attorney handling the Estate administration. Therefore, the listing agent may advise the Estate’s representative to check with their Trusts & Estates attorney before agreeing to any personal property inclusions.
Similarly, personal property that is excluded from the real estate transaction, such as furniture, furnishings, books, and photo albums, it may also be a good idea to have the Estate’s representative consult the Estate’s attorney to ensure that these items have not been “gifted” to someone in the Will.
Bonus Tip. Most Purchaser attorneys will ask the Seller to make certain representations, e.g. that there have been no water leaks within the last six months, or no known underground storage tanks, etc. When the Seller is an Estate, the Estate’s representatives may have no firsthand knowledge regarding the property and therefore, the Estate’s representative may not be able to provide these representations. In such cases, the Purchaser may need to perform additional diligence before they can comfortably sign the Contract of Sale. If the listing agent is aware that the Seller is an Estate, they may wish to inform the buyers’ agent in advance that the property is being sold “as-is” so that the Purchaser can have more lead time to complete their inspections.
For questions pertaining to residential real estate or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to email@example.com. We look forward to hearing from you.
Betensky Law PLLC
118 N. Bedford Road, Suite 302
Mount Kisco, New York 10549
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