Real Property Expenses and Estate Administration

Real property such as houses, land, and condominiums can often be a source of confusion in estate administration. As with many areas of the law, this one has a few general rules and several exceptions that make every estate administration unique. While this article may provide some guidelines to the basic estate administration questions, you should take your case to a Real Estate Lawyer or Estate Administration Lawyer.

Real Property and Estate Administration

In general, your real property, commonly called real estate, passes directly to the beneficiary or beneficiaries named in the deceased’s will. This transaction occurs on the date of the deceased’s death. Alternatively, if the deceased dies without leaving a will, the real property passes directly to the deceased’s heirs. Who the heirs are depends on a number of factors, including, but not limited to, how the decedent acquired the property; how the real property was owned by the decedent; if the decedent was married; and how many children the decedent had.

In those situations where ownership of the real property passes directly to the beneficiaries of an estate or heirs of a decedent, any expenses related to the real property become the debts of the beneficiaries or heirs. The heirs and the administrator of the estate should contact a lawyer to determine who is responsible for those debts and whether they can be paid from the assets in the estate. Similarly, the heirs and beneficiaries should be concerned if the real estate is encumbered by a deed of trust, or mortgage.

Exceptions to the Rule

As we mentioned above, there are exceptions to every rule and real estate doesn’t always pass on to the next of kin. It is possible for a decedent to have left the real estate to the estate with instructions to the Executor on what to do with the property. This includes putting it in a trust, selling it, giving to someone in particular, etc. In these cases, special consideration must be given as to whether or not the utilities and maintenance become debts of the estate and can be paid from the estate assets. Before you use estate funds to pay for real property expenses, you should contact an attorney.

Another scenario in which the real property shouldn’t pass on to the heirs is if the decedent left enough expenses in the estate that the real property must be brought back into the estate to be sold for the purpose of paying the debts of the estate.

This can occurs if the debts of the estate exceed the value of the personal property that could be used to pay down the debts. But don’t just list the property for sale. You should consult with a lawyer on how to correctly utilize real property in this situation as there are several steps that one must to take to legally allow the estate to sell real property.

This is a common pitfall in which the Executor or Administrator, having the best of intentions, feels that he or she is doing what is in the best interest of the estate. Unfortunately, this can be a costly mistake. Often Executors and Administrators will pay the real property expenses assuming that these are debts of the estate, only to find out later that they must reimburse the estate for the funds used. Before paying any expenses out of an estate, the Executor or Administrator should consult with their legal counsel to ensure they are paying the proper debts of the estate and paying them in the correct order. An attorney experienced in estate administration will give you proper guidance to avoid this and other common mistakes when administering an estate.

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