Profits In Probate Real Estate - Part 5 27.
If, in every home you buy, you are acquiring from $5,000 to $50,000
in free equity how many do you need to buy every year to feel successful?
You can sell some for cash flow (immediate income) and keep the most
desirable as profitable rental properties.
The ones you keep will double in value in five to ten years if our
economy stays strong. If you kept one property per year for five years and
their average value was $100,000 each. At the end of ten years you would
have property worth $1,000,000 not counting the 5% to 10% yearly gain in
appreciating and mortgage pay-down. Isn’t that worth a little effort?
You must be certain that the PR has the authority to give you good
title for anything you buy…especially real estate. You will not be able to
get title insurance if you don’t have clear and legal title.
Under some Independent Administrator rules the administrator can
only sell real property out of the estate (without court supervision) if he first
gives heirs a Notice of Proposed Action.
The notice must include material terms of the transaction, including
the sales price and any commission paid to an agent or broker. Your title
company will want to be sure this notice has been correctly given.
In some states “letters testamentary” is what gives the PR the power
to transfer title to property. In the case of real estate the “letters
testamentary” document may have to be recorded.
Check with your title company or attorney to learn exactly how you
can be sure you are getting good title.
You may consider buying a “do-it-yourself” probate book. You will
find it to be a valuable reference. Check with one of the major books stores
in your area to see what is available.
When buying personal property from the estate you must require the
PR to give you a Bill of Sale with an itemized list of the property you are
buying. You must do this to avoid any misunderstandings and so you will
have proof of legal purchase.
The is a sample Bill of Sale on the following page:
28.
BILL OF SALE
[Date]
[Addressee]
Dear [Name]
:
I, [Administrator], of [address], County of [County], State of
[State], in consideration of $[dollar amount], to me paid by
[Name of Buyer], the receipt of which is hereby acknowledged, do
hereby grant, sell, transfer and deliver unto [Buyer] the
following goods, namely:
[Description/list of goods being purchased]
To have and to hold the same to [Buyer] and his/her heirs,
executors, administrators, successors and assigns, to their use
forever. And I hereby covenant with the grantee [Buyer] that
I
am the court appointed administrator of the estate that is the
lawful owner of said goods; that they are free from all
encumbrances; that I have court authorization to sell the same
as aforesaid; and that I will warrant and defend the same
against the lawful claims and demands of all persons.
In witness, whereof, I, [Administrator], hereunto set my hand,
this [#] day of [Month, year]
.
Yours very truly,
[clearly print name after signature with the designation of
Administrator, executor or court authorized title, followed by
Probate Case #
]
Witness: _____________________________
_
[clearly print name]
29.
THE PATH
Life is filled with many paths. Each of us must choose the one we
wish to travel. We need not fear traveling the wrong path for after only a
short distance we will find the road has a fork and we again must choose
which path to follow. Should we stay on the path, or should we take the
new one? That choice depends upon what kind of journey we have had so
far. If it has been good let’s continue. If not change direction with the new
path.
You have now come to a fork in the road and this manuscript is a new
path. No one can force you to change direction. You are your own pilot.
You alone are responsible for your success or failure.
Yes you may be very comfortable moving along your present course.
It is well worn and easy to follow. The problem is that is has been worn
smooth by the passage of many feet, all taking the easy, safe route. To
travel the path traveled by the masses is to get nowhere.
The real opportunity is found by traveling the path known to few. This
is where you will discover excitement, opportunity and freedom. All you
have ever wanted from life is just ahead – only a short journey from here.
The choice is now yours. The thrill of success, the rewards, all await
you just around the corner!
(The titles “executor”, “administrator” and “Personal Representative” have been used
interchangeably in these pages. States use various titles to identify the person in charge of a
probate.)
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What follows are some selections from various states' probate
statutes. These are included just to give you an idea of how probate law
can empower an administrator to sell property with little or no court
supervision.
30.
PROBATE ADMINISTRATION OF A DECEDENT'S ESTATE
Published by the Probate and Estate Planning Section of the State Bar of Michigan
Regular Estates
There are two forms of regular administration of a decedent's
estate. The first, unsupervised administration permits the PR to
act in a manner independent of the court unless intervention is
requested by the PR or an interested person (such as an unpaid
creditor or an estate beneficiary). This form of administration
is generally preferred unless there is a specific reason to
request the court’s supervision of the estate. In addition,
since there is less court involvement, fewer details concerning
the estate's administration will be in the court file and
available for inspection by the public and the media,
unsupervised administration offers some privacy for the
decedent's family.
The second form of probate administration, supervised
administration, requires the probate court's review and approval
of much of the estate activities. For example, in supervised
administration the court would be required to (i) approve the
sale of the decedent's real estate (unless the decedent's will
authorizes the PR to do so), (ii) authorize the payment of PR
and attorney fees, (iii) review the PR's accounting of all
receipts and disbursements, and (iv) prior approval of all
distributions to heirs (people receiving property from the
estate is there is no will) and devisees (people receiving
property under a will). While the court's involvement frequently
adds to the time and expense of administering an estate, the
court's supervision will likely afford greater protection to the
PR and the other interested persons against losses and claims
Unsupervised administration is commenced by filing either an
application or petition with the probate court. Supervised
administration is commenced by filing a petition that includes
a
request for supervision
==========
=
524.3-711 Powers of personal representatives; in general.
Until termination of the appointment a personal representative
has the same power over the title to property of the estate that
an absolute owner would have, in trust however, for the benefit
of the creditors and others interested in the estate. This power
may be exercised without notice, hearing, or order of court and
when so exercised shall transfer good title to the transferee to
the same extent that decedent had title thereto; provided,
however, that a personal representative appointed in an informal
proceeding shall not be empowered to sell, encumber,
32.
lease or distribute any interest in real estate owned by the
decedent until 30 days have passed from the date of the issuance
of the letters.
524.3-715 Transactions authorized for personal representatives;
exceptions.
Except as restricted or otherwise provided by the will or by an
order in a formal proceeding and subject to the priorities
stated in section 524.3-902, a personal representative, acting
reasonably for the benefit of the interested persons, may
properly:
(1) retain assets owned by the decedent pending distribution or
liquidation including those in which the representative is
personally interested or which are otherwise improper for trust
investment;
(2) receive assets from fiduciaries, or other sources;
(3) perform, compromise or refuse performance of the decedent's
contracts that continue as obligations of the estate, as the
personal representative may determine under the circumstances.
In performing enforceable contracts by the decedent to convey or
lease land, the personal representative, among other possible
courses of action, may:
(i) execute and deliver a deed of conveyance for cash payment of
all sums remaining due or the purchaser's note for the sum
remaining due secured by a mortgage or deed of trust on the
land; or
(ii) deliver a deed in escrow with directions that the
proceeds, when paid in accordance with the escrow agreement, be
paid to the successors of the decedent, as designated in the
escrow agreement;
(4) satisfy written charitable pledges of the decedent
irrespective of whether the pledges constituted binding
obligations of the decedent or were properly presented as
claims, if in the judgment of the personal representative the
decedent would have wanted the pledges completed under the
circumstances;
(5) if funds are not needed to meet debts and expenses currently
payable and are not immediately distributable, deposit or invest
liquid assets of the estate, including moneys received from the
sale of other assets, in federally insured interest-bearing
accounts, readily marketable secured loan arrangements or other
prudent investments which would be reasonable for use by
trustees generally;
(6) acquire or dispose of an asset, including land in this or
another state, for cash or on credit, at public or private sale;
and manage, develop, improve, exchange, partition, change the
character of, or abandon an estate asset;
32.
(7) make ordinary or extraordinary repairs or alterations in
buildings or other structures, demolish any improvements, raze
existing or erect new party walls or buildings;
(8) subdivide, develop or dedicate land to public use; make or
obtain the vacation of plats and adjust boundaries; or adjust
differences in valuation on exchange or partition by giving or
receiving considerations; or dedicate easements to public use
without consideration;
(9) enter for any purpose into a lease as lessor or lessee, with
or without option to purchase or renew, for a term within or
extending beyond the period of administration;
(10) enter into a lease or arrangement for exploration and
removal of minerals or other natural resources or enter into
a
pooling or unitization agreement;
(11) abandon property when, in the opinion of the personal
representative, it is valueless, or is so encumbered, or is in
condition that it is of no benefit to the estate;
(12) vote stocks or other securities in person or by general or
limited proxy;
(13) pay calls, assessments, and other sums chargeable or
accruing against or on account of securities, unless barred by
the provisions relating to claims;
(14) hold a security in the name of a nominee or in other form
without disclosure of the interest of the estate but the
personal representative is liable for any act of the nominee in
connection with the security so held;
(15) insure the assets of the estate against damage, loss and
liability and the personal representative against liability as
to third persons;
(16) borrow money with or without security to be repaid from the
estate assets or otherwise; and advance money for the protection
of the estate;
(17) effect a fair and reasonable compromise with any debtor or
obligor, or extend, renew or in any manner modify the terms of
any obligation owing to the estate. The personal representative
on holding a mortgage, pledge or other lien upon property of
another person may, in lieu of foreclosure, accept a conveyance
or transfer of encumbered assets from the owner thereof in
satisfaction of the indebtedness secured by lien;
(19) sell or exercise stock subscription or conversion rights;
consent, directly or through a committee or other agent, to the
reorganization, consolidation, merger, dissolution, or
liquidation of a corporation or other business enterprise;
(20) allocate items of income or expense to either estate income
or principal, as permitted or provided by law;
33.
(21) employ persons, including attorneys, auditors, investment
advisors, or agents, even if they are associated with the
personal representative, to advise or assist the personal
representative in the performance of administrative duties; act
without independent investigation upon their recommendations;
and instead of acting personally, employ one or more agents to
perform any act of administration, whether or not discretionary;
(22) prosecute or defend claims, or proceedings in any
jurisdiction for the protection of the estate and of the
personal representative in the performance of duties;
(23) sell, mortgage, or lease any real or personal property of
the estate or any interest therein for cash, credit, or for part
cash and part credit, and with or without security for unpaid
balances, provided, however, that the homestead of a decedent
when the spouse takes any interest therein shall not be sold,
mortgaged or leased unless the written consent of the spouse has
been obtained. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
