Anyone that has been actively involved in the real estate market has likely encountered a probate sale at some point. Properties sold in probate court can be a fantastic deal because they are often priced much lower than other homes and are priced to sell. Purchasing a probate property can be risky as the sales often take longer than traditional real estate transactions because of disputes between the surviving family members and the Court system.
Probate sales are usually represented by an estate attorney or a representative of the estate, and they sell the property of a homeowner who has passed away either with or without a will, depending on how the decedent’s estate was prepared. The role of the attorney for the estate is to assist in the distribution (liquidation) of the assets of the estate to the named beneficiaries.
In a probate sale, the estate attorney works with a real estate agent that is selected by the executor of the estate. Many potential buyers are often drawn in by the budget-friendly pricing of the real estate but purchasing a property that is probate is not for everyone. The properties are usually in need of repair and upgrades, as in many circumstances, the decedent did not consistently maintain or upgrade features of the property.
When a potential buyer makes an offer that is accepted by the executor of the Estate, the purchase process officially commences. Presuming that an Estate has been opened for the decedent and Letters of Office have been issued to the Executor of the Estate, the Executor has the power (under the Letters of Office) to sign documents as they relate to the closing on behalf of the estate for the sale of the property. In Illinois, the process from offer acceptance to closing generally extends between 30-45 days depending on the buyer’s lender approving the loan. However, once the loan is approved, the Executor will attend the closing with the attorney and complete the necessary documentation to complete the sale.
However, the Executor’s role does not conclude when the sale is final. The Executor then has to account and issue proceeds checks to the beneficiaries that are listed in the decedent’s will and the attorney for the estate of the decedent will need to file an accounting with the Court both when the estate is opened, and a final accounting after the assets have been liquidated to demonstrate to the Court that the property has been distributed in accordance with the distributions listed in the decedent’s will. When the final accounting has been completed and presented to the Court, the decedent’s estate can be formally closed.
Probate home sales can be more involved than a regular real estate transaction and can provide potential buyers with the property at a much lower price. Anyone considering making an offer on a probate property should seek the assistance of a knowledgable real estate agent and an attorney who is well versed in probate sales.
There is a common misconception that real estate transactions do not ever end up in Court. However, real estate transactions are contracts in the purest sense and parties can fail to uphold their contractual duties, which can result in a real estate transaction appearing before a Judge for a decision as such relates to a potential breach.
When a real estate contract is signed by a buyer and a seller, there are disclosures and representations that must be made by the seller. They must disclose the condition of the property including but not limited to, compliance with local municipality codes and regulations, tax exemption status on the property, and the presence (or absence) of potentially harmful substances in the property such as radon or mold. Sometimes a buyer terminates a contract on the eve of closing, and the seller is preparing to close on their own purchase and needs the funds from their sale to move onto their new home but now cannot do so. The above are examples of some of the potential breaches that can occur in a real estate transaction; both buyers and sellers have remedies available to them, and it is best to consult with your attorney to determine the best next course of action in the event of a breach.
When you are the buyer, and the seller misrepresents something that you do not learn about until you take possession of the property, what is your recourse? First, you need to consult with your attorney that assisted you with your closing and determine if there is an actionable basis for a lawsuit, as sometimes, the expense of litigation outweighs the remedy that you will recover. Second, if your attorney does determine that there was a material breach by the seller, then depending on the extent of the breach, you will need to file a lawsuit in the appropriate court based on the actions or omissions of the seller(s). Every case is different, and it is imperative to understand that simply because you contend that there was a breach (and you may be correct in your contention), the Court may not always agree with your position. Thus, it is imperative to ensure that you consult your attorney and thoroughly review the facts of the matter before proceeding with litigation.
When you are the seller and the buyer breaches, the process is very similar. You as the seller need to consult with your attorney to determine if what the buyer has done is a material breach of the contract and if the matter is worth pursuing in Court. You should have a very thorough conversation with your attorney as it relates to the potential outcomes and ramifications of filing suit against a buyer for a potential breach and whether it is worth filing suit or minimizing your losses and moving forward. Again, it is the skill and knowledge of your attorney who will be in the best position to provide you with the possible courses of action and the potential results that should assist you in making an informed decision.