Selling Real Estate During Probate in Florida – A Lawyer’s Guide
In this article, we’ll break down the following:
- Preliminary Considerations When Selling Real Estate During Probate in Florida
- First Steps When Selling Real Estate During Probate
- Procedures for Selling Probate Real Estate in Florida
- Legal Issues That Can Impact a Sale
- Frequently Asked Questions
Selling real estate during a Florida probate administration can be difficult for a decedent’s surviving family to navigate. That’s because Florida has complex laws and rules regulating how an estate is administered.
In this article, we discuss the probate process in its entirety and hope that this information will prove useful when settling a decedent’s estate.
When selling real estate during probate in Florida, you must determine the rightful beneficiaries of the property and what, if any, controlling documents must be consulted and followed. To this end, some questions need to be answered as part of the due diligence process:
Was There a Will or Living Trust?
A will must be submitted to the probate court for filing. After this, the will must be admitted to probate by the judge pursuant to a court order. Once that happens, an inquiry will be made about whether enough time has passed for interested parties to contest the will.
You will also need to determine which beneficiaries have been named in the will, where they are, and whether they were notified of the probate administration.
The same due diligence process applies to living trusts. You must determine if the decedent signed a living trust, whether the real estate was titled in the trust’s name, and who the trust’s beneficiaries are.
You will also need to establish whether notice of the trust had been filed with the probate court, whether the Trust was being contested, or if anyone had filed a claim against the decedent’s estate.
These issues are important because they determine who has to receive notice of a sale, authorize and agree to the sale, and sign a deed.
Did the Decedent Live on the Florida Property, and Was It Their Primary Residence?
The next part of the due diligence process will be establishing whether the real estate was the decedent’s primary residence or homestead.
The reason for this has to do with Florida’s homestead laws. One of the many issues here is related to creditor claims. Very few creditor claims attach to a decedent’s homestead. Florida’s homestead law allows the property to pass to certain heirs free of most creditor claims (not a mortgage holder or other secured interest).
If there are creditor claims or likely claims, the property may be sold, but the proceeds may not be immediately available to pay claims or distributed to the beneficiaries.
Did the Decedent Have a Spouse or Minor Children?
If the decedent did have a spouse or minor child, then under Florida Statute §732.4015, Florida homestead statute, the property “shall not be subject to devise if the owner is survived by a spouse or a minor child or minor children, except that the homestead may be devised to the owner’s spouse if there is no minor child or minor children.”
Does a Florida LLC or Corporation Own the Property?
If the property left behind by the decedent were owned by a Florida LLC, corporation, partnership, or any other legal entity, then you would need to address a variety of issues like the percentage ownership the decedent owned in the entity, and whether the entity had a controlling agreement that contemplated what happened in the event an owner has become deceased.
Is the Property Owned by the Decedent Alone, as Joint Tenants With Rights of Survivorship, or as Tenants in Common?
Here’s how to proceed if the decedent owned the Florida real estate in a joint tenancy:
- If the decedent owned the property as joint tenants with their surviving spouse, the title automatically passes to the latter without going through probate.
- If the decedent owned the property as joint tenants with full rights of survivorship with someone other than their spouse, the title automatically passes to that tenant without going through probate.
- If the decedent owned the property jointly as tenants in common, the decedent’s share must be part of the probate administration.
First Steps When Selling Real Estate During Probate
Once you’ve addressed and/or contemplated the issues above, you are ready to proceed with the sale of the property. There are three basic steps involved in this process:
1. Valuing the Property
When more than one beneficiary is involved, a property appraisal will always be a good idea. This can be done through an independent appraiser, the county property appraiser assessment, or via a real estate broker opinion letter.
The idea behind having the property professionally appraised is so that all the parties involved feel satisfied that they are getting the best possible price for the real estate.
Depending on the probate, the court may oversee the property sale and may be interested in seeing comparably priced homes provided by an appraiser or a Florida real estate agent. This will ensure the real estate is sold at market value.
2. Listing the Property With a licensed Florida Real Estate Agent
During a formal probate administration, the court will appoint a personal representative (“P.R.”). This individual will likely hire a licensed Florida real estate agent, and the P.R. will be required to sign a listing agreement.
3. Accepting Offers and Signing the Contract
Suppose a prospective buyer were to make an offer that the P.R. and/or the estate’s beneficiaries found acceptable. In that case, the court-appointed personal representative will go ahead and accept it on their behalf and sign the purchase and sales contract. The buyer’s attorney will likely want the beneficiaries to sign the contract too.
Once the transaction closes, the probate attorney will likely hold the proceeds from the sale in escrow until the creditors’ claim period (three months from publishing a notice to creditors) has passed.
Once that period has lapsed, the money will be distributed among the rightful heirs or, if there are claims, the funds are first used to pay any outstanding creditor claims, P.R. liens, or other administrative costs of the probate.
These steps for distributing the funds are influenced by whether or not the property is determined to be the decedent homestead property, among other issues.
Additional Procedural Issues to Consider When Selling Probate Real Estate in Florida
The process of selling probate property differs from a traditional real estate sale. The transaction doesn’t end once the personal representative signs the contract and the buyer puts down the deposit. Here are some important additional issues you need to be aware of when probate proceedings are underway.
Power of Sale Granted in a Will
If the decedent’s will contains a Power of Sale, then the personal representative doesn’t require a court order to sell or convey the property. Florida Statute §733.612(5) confers the power to sell personal property on them.
The Power of Sale granted to the personal representative listed in the will can be expressed directly or by implication. It gives them broad discretion to administer the decedent’s assets—property included—in a manner they deem in the estate’s best interest.
If no power of sale appears in the will, then the P.R. will need court approval to effectuate the sale. See below.
Court Authorization or Confirmation
Under Florida Statute §733.613(1), if the decedent died intestate, failed to grant Power of Sale in their will, or if the power granted to the personal representative is so restricted that they cannot exercise it conveniently, the court must give express authorization to the personal representative to dispose of the probate property.
The court may grant this permission before the sale has been made or grant confirmation after the sale has concluded.
Unless extenuating circumstances prevent the personal representative from seeking court permission beforehand, the better practice would be to obtain permission from a judge before the sale, especially if there was an anticipated objection.
Procedure to Secure Court Authorization or Confirmation
If Florida law requires court approval for the sale of real property in probate proceedings or authorization is sought for the protection of the personal representative in contentious cases, Florida Statute §733.613(1) and Florida Probate Rule §5.370 outline the steps for securing court authorization or confirmation, and will require the following:
- A verified court petition for the authorization or confirmation of the property sale;
- The joinder or consent of interested parties or a notice of hearing;
- A hearing on the filed petition; and
- A court order authorizing or confirming the property sale or ownership transfer.
The petition for the authorization or confirmation of the real estate sale should include the following:
- The reasons for the sale: These must be addressed in detail to show the court that the property sale is in the estate’s best interest and its rightful beneficiaries.
- A detailed description of the asset intended to be sold or sold: The description provided should identify the specific real estate clearly and sufficiently.
- The terms and price of the sale: The terms should be addressed clearly, and the price should be stated specifically.
It is worth noting that if, for whatever reason, the personal representative fails to sell or initiate proceedings to begin the sale of the decedent’s property in the time they are mandated to do so, any of the interested parties in the probate can petition the court for an order compelling the personal representative to sell it.
Distributing Proceeds to Heirs or Beneficiaries: Creditor Claims
Suppose the decedent had outstanding debts at the time of their passing, and the property was the decedent’s homestead property. In that case, Florida law allows creditors to be paid first from the probate estate before the beneficiaries. Examples of creditors that might have liens on the decedent’s property include:
- Local, state, and federal governments with liens on the property for taxes and other assessments.
- Suppliers, subcontractors, and contractors with liens on the property for monies owed on services rendered.
- A mortgage lender with a lien on the property for outstanding payments.
Due to Florida Statute §733.702, proceeds from the sale of the decedent’s real estate may be held temporarily for up to three months. Once the statutory creditor period has expired and no claims have been filed, the money from the sale will be distributed to the beneficiaries (subject to paying a P.R. lien and perhaps other administrative costs of the probate).
Legal Issues That Can Impact a Sale
Some common issues that may arise when selling real estate during probate include:
A Contested Will
Complications during probate proceedings may arise if any person disputes the will or if there are disagreements over its interpretation or the distribution of the property.
Unresolved issues with a property’s title can impact its sales. Things like liens on the property (secured, unsecured or otherwise), divorce, typos in the legal description, property boundary disputes, and a broken chain of title can all delay the sale process.
Taxes and Probate Expenses
The decedent’s estate will be liable for any outstanding taxes, including real estate taxes (ad valorem taxes), income tax levied on any income the property generates, and estate taxes.
Under Florida Statute §733.608 (4), the personal representative’s lien will also attach to the real estate regarding all probate expenses incurred by the personal representative to protect and preserve the property. This lien will take precedence over all other creditor claims.
Florida Statute §733.2121 requires the personal representative to publish a notice to creditors containing the decedent’s name, the estate’s file number, the address and designation of the court where the probate proceedings will be heard, the name and address of the personal representative’s probate lawyer, and the date when the notice was first published.
The notice should be published once a week for two consecutive weeks and should inform creditors of the statutory claim periods outlined in Florida Statute §733.702. The personal representative must prioritize these claims over distributing assets to the beneficiaries.
Frequently Asked Questions (FAQs)
Does an attorney need to be part of selling real estate during a probate administration?
Yes. In formal probate, the personal representative must be represented by an attorney. Besides facilitating the administration, an attorney will be necessary for most of the above real estate issues, among others.
How long does the process of selling real estate during probate take?
Often, the sale can occur immediately after a Personal Representative is appointed. If court approval is needed, that can delay the matter for a few days (most common) to a few months.
Is court intervention always necessary for selling a house in probate in Florida?
Not always. If the decedent’s will contains a Power of Sale, and no restrictions are listed on the Letters of Administration, then the personal representative isn’t required to obtain court approval to sell or convey the property.
Can the personal representative hire a realtor to sell the property?
Yes, they can. Under Florida probate law, the personal representative has the power to hire a licensed Florida realtor to sell the property. The P.R. also has the power to sign a listing agreement and a purchase and sale agreement.
Does the probate court need to approve the sale of the decedent’s property?
It does in certain circumstances. If the decedent died intestate, failed to grant Power of Sale in their will, or if the power granted to the personal representative is so restricted that they cannot exercise it conveniently, the court must give express authorization to the personal representative to dispose of the probate property. If any of the above apply, the court must grant permission before the sale.
What happens to the proceeds from the sale during probate?
Proceeds from the sale of the decedent’s real estate may be held temporarily for up to three months. Once the statutory creditor period has expired and no claims have been filed, the money from the sale may be distributed to the beneficiaries.
Can a personal representative sell real property in Florida if the testator has not conferred a Power of Sale or if the Power of Sale is limited?
No, they cannot. If the decedent failed to grant Power of Sale in their will, or if the power granted to the personal representative is so limited that they cannot exercise it conveniently, the court must give express authorization to the personal representative to dispose of the probate property.
Can a homestead property be sold before probate in Florida?
No, it cannot if the decedent was the sole owner of the property. In that instance, only the probate court can determine the property as homestead property by issuing an order that determines the property as homestead real estate. If the property was jointly owned with the decedent’s spouse, the surviving spouse could sell the property before a formal probate administration is filed.
Get a Free Case Evaluation – Call (954) 458-8655 to Speak With a Lawyer
Contact Larry to find out how he can help you. You can contact him by phone at 954-458-8655 or by e-mail through this website to schedule an appointment and learn more about Florida real estate transactions involving probate property. He offers a free initial consultation.
Want to Know More?
To learn more from Larry and see all the real estate matters he can help with, read his Real Estate Lawyer page.
Do You Have a Question?
Please fill out the “Talk With Us” form above to ask a question, or you can call us at 954-458-8655. We promise to get back to you promptly. Ask now.