When selling a property, the process of transferring title to the buyer is usually pretty straightforward. But what happens when it’s not? How is title transferred, for example, if the title-holder died more than one year ago? Understanding how to proactively and accurately navigate this situation can mean the difference between impressing your client or floundering as the closing date approaches. You can help your client avoid legal pitfalls that could threaten the transaction or, at a minimum, could cause significant (and costly) delays in getting the deal to the closing table.
Here, we provide some tips for what to do when you’re dealing with a property that is titled in the name of a person who passed away more than one year ago.
The basic legalities
In Missouri, the state law mandates that a will be submitted to the probate court within one year of the individual’s death. If the will is not filed with the court within this one-year period, the heirs forfeit the right to utilize the probate process to transfer title to the deceased’s property under the dictates of the will.
This happens more than you would imagine. Families may disagree about what to do with a property, and it’s not that uncommon for a property to sit for more than a year without going to probate. By the time the family members decide to put the property on the market, you’ve got a complicated situation where a legal determination will have to be made regarding heirship of the property. In such circumstances, you will need the title company or an attorney to prepare an affidavit-of-heirship to be signed by one of the deceased’s heirs. In the affidavit-of-heirship, all of the legal heirs-at-law of the deceased are identified and the affiant confirms that the deceased was “single” at the time of his or her death.
The next step is for your title company or attorney to prepare the conveyance deed – i.e., a general warranty deed, special warranty deed or quitclaim deed – for ALL of the HEIRS identified in the affidavit-of-heirship to sign. If any of the designated heirs are married, the spouses of such heirs will also sign the conveyance deed (or, at a minimum, a “waiver of marital rights”).
This two-step process — affidavit-of-heirship followed by conveyance deed signed by all heirs – can be logistically-difficult, particularly if heirs reside in different parts of the country or if any of the heirs are hesitant (or hostile) about participating in the title transfer process. Getting a head-start on this process is key if you want to keep your transaction on the agreed-upon time schedule. And always note that your title company must approve this two-step process, and title companies (and their underwriters) may differ with respect to their requirements in this regard.
If you discover that the title-holder of a property you are listing is deceased, the number one thing you should do to avoid headaches and delays is to immediately alert your title company and ask them what needs to be done. Waiting until the closing date approaches means that there will be delays—and they could be significant enough to cause the buyer to give up in frustration and walk away, regardless of how invested they were in the property.
We recently dealt with a situation in which the gentleman in question had passed away more than two years ago, and one family member lived in the property. To ensure we determined heirship accurately and resolved the situation quickly, we worked with an attorney to assist with production of proof and analysis of errors. In the end, eight different family members signed a special warranty deed, and we were able to prepare signature pages that we sent to all eight individuals. We resolved the issue in just two weeks and avoided having to go to court (which would have taken much longer!)
The bottom line — simply checking the tax assessor’s records is not enough to accurately determine heirship or ownership of a property in these cases. If you take a little extra time upfront to check with your title company on who has the right to the property, you’ll set yourself apart and ensure your client enjoys a smooth, timely closing experience.