There seem to be more questions than answers when it comes to managing the sale of estates. How is equity dispersed? What is the value of the estate? Where does the probate process come in?
As a real estate broker, you know that selling an estate requires careful consideration, and this is where working with an experienced real estate attorney can make a difference.
Establishing the Home is “Free and Clear”
A real estate attorney in Illinois establishes if the home is “free and clear” based on the following criteria:
There is no mortgage
There are no tax or judgment liens
There are no claims from other parties to an interest in the property
The attorney can then look at how the equity is to be distributed according to the will or trust or intestacy law, and you can appraise the house to set a value for selling.
Title Searches and Sole Ownership
If you have proof your client is the sole owner of the house, the process becomes easier for the executor of the estate. However, you have to establish ownership through title searches. It is not uncommon for people claiming to have rights to a house to show up during the process of selling estate property.
If your client inherited the Illinois home with others, you could run into discrepancies if they disagree on how to handle the property. A real estate attorney can help mediate challenges and represent your client’s best interests. Some scenarios include:
One sibling wants to live in the home instead of selling, and the equity must be refinanced so they can afford to carry the mortgage alone
A sibling is willing to buy out all shares so they can own the home outright
Private financing structures, such as allowing for installments paid to your client by a sibling with interest and an agreement for your client to have the right to foreclose for nonpayment
Deciding to use the property as an investment rental property
Fast sale for cash through a redevelopment firm in Illinois
A disagreement among the siblings as to the value of the property
All of these scenarios are complicated and have their pros and cons. A real estate attorney can walk everyone through their options and then draw up agreements once a decision is made.
Navigating the Probate Process in Illinois
If the property was not in a trust, inherited property in Illinois cannot be sold until the probate process is complete and unless the title company will insure title based on an “Affidavit of Heirship” on a Bond in Lieu of Probate. Probate is a complicated process that involves getting the will approved in court. It can have the advantage of cutting off claims to the estate or allowing for collection of assets. Your client cannot make any decisions on their own and is dependent on the court to approve the sale. This involves:
Independent appraisal: Your professional estimate is provided in hand with one other appraisal, which is required by law.
Market the property: Once the value is established, before selling the home, you must publish an auction notice to attract buyers.
Arrange the hearing: The buying process must take place in court, where a judge presides over the auction. Each buyer must submit a 10% deposit with their offer, and the property goes to the highest bidder. The buyer then submits the entire payment for the house.
An attorney can assist with all of these steps.
If all of the heirs can be identified and agree to the sale of the property, generally the property can be sold with a Bond in Lieu of Probate. The bond is not inexpensive, but it is cheaper than probate. If there are no other assets of any value beyond sentimental value and there are no creditors who can make claims, this may be the best option.
We Can Help
With almost 40 years of experience in Illinois real estate law, Erica Minchella has the expertise to handle the sale of estates and provide your client with peace-of-mind for a successful transaction. Get started by scheduling a consultation today.