Probate property sales are challenging – take some time to get familiar with the inheritance process.

This site walks through common questions and pressing issues when
selling an inherited Minnesota house.

Read on if you want to sell a house in probate fast, easy,
and profitably!

 

How Probate Works & Resources

“Probate” proceedings normally begin before an inherited house is sold. Probate litigation has five stages. Obtain information about each stage of probate on nolo.com.

1. Filing the petition. Probate litigation is instituted by a personal
representative named in the will or a person petitions the court to be
executor.

2. Notice to creditors and beneficiaries. The representative must notice
anyone with an interest in the estate.

3. Payment of the Estate’s debts, taxes, and expenses. Debts do not
disappear – they must be paid before you inherit. Probate property is
commonly used to satisfy amounts owed.

4. Legal title of property transferred in accordance with the will of local
inheritance laws. Once creditor claims are satisfied, the personal
representative petitions the court to transfer remaining assets to
beneficiaries.

5. Closing the probate estate. The estate is formally closed with a final
account, petition for distribution, a final hearing with notice to all parties.

What Is Probate?

Probate is the legal process that occurs after a person (“the
decedent”) passes away. It is the administration of the “estate” (the sum of the decedent’s assets).

Probate has two main objectives: (1) the debts of the estate are settled, and (2) ownership of property is transferred to heirs and beneficiaries. The process includes proving a will is valid (where one exists), identifying and appraising the decedent’s property, and paying outstanding debts and taxes.

If the property remains after resolving valid creditor claims, it is distributed in accordance with local state law. Probate property includes real state, personal property, as well as financial instruments
(stocks, bonds, ownership in business).

Alternatives To Selling a Probate House

Not sure if you want to sell your Minnesota probate house?

Several other options are available if you inherit a house:

  • Move In. Are you renting or unhappy with your current living arrangement? Probate house are frequently “free and clear” (i.e. the mortgage has been paid off). You can move in and live without substantial monthly rent or mortgage payments. Of course, the downside is by not selling you will not receive a lump sum cash payment.
  • Rent It Out. Want a steady stream of monthly payments? Consider renting the place. Study the local neighborhood rental rates. Houses with 3+
    bedrooms in a good neighborhood tend to make solid investments. You can also capture appreciation by holding the real estate overtime. Be wary if you live far away – long distance landlords struggle to manage rental property.
  • Become The Tenant! Many heirs don’t realize you can get a lump sum payment and move into the property (or remain there if you already reside there). Real estate investors often are happy to buy the property for cash and let you remain under a lease.

Sell Direct or Pay A Realtor?

Those selling probate or inherited property face the following question. Real estate sellers must decide whether a realtor is worth six percent commission.

Should I sell my house on my own, or hire a real estate agent?

There are advantages and disadvantages of each approach. Let’s walk through them . . . Reasons to sell on your own:

Save up to 6% in realtor commission.

Avoid “open houses” and repeated showings.

No online listings or “for sale” signs on the lawn.

Close faster on your schedule.

Avoid exclusive listing agreements guaranteeing commissions even if you find the buyer or the agent fails to get the promised price.

Reasons to hire an agent:

Limited time available to oversee the sale.

Agents serve as a neutral negotiator.

House will be listed publicly for sale.

Don’t mind waiting some time to sell for top dollar.

Little knowledge of real estate sales.

How to Sell a Probate House: Minnesota

Are you thinking about selling a probate or inherited house in Minnesota?

Unlike the typical home sale process, probate law has its own rules and regulations
which must be followed.  There are certain preliminary considerations in every
probate involving the sale of a home or other real estate.

Preliminary Considerations

The sale of real estate in a Minnesota probate may present a number of issues.  The first issue is whether the deceased person (decedent) had a Will or died intestate
(without a Will).  If there was a Will, the personal representative of the estate
should review what the decedent wants to happen.  If the decedent specifically “gave” the home or other real estate to a specific person, those wishes must be
followed.  If the decedent did “give” the home to a specific person then it belongs
to the heirs of the estate, in equal shares.

Next, the personal representative must figure out whether his or her authority to
sell the property is in some way restricted by the law.  For instance, if the home is
classified as a “homestead” under Minnesota law, it is exempt from most creditor
claims (other than property taxes, other judgments or liens, and a medical
assistance lien).

Consent of the Heirs

If a parcel of real property is classified as a homestead, the personal representative may not sell the property to pay administration expenses without the written consent of interested parties.  Most Wills specifically grant the personal representative to power to sell property.   Also if the decedent died intestate, then Minnesota law does give the personal representative authority to sell the home.  However, the money from the sale needs to be placed into an estate bank account.  However, again, in the case of a homestead property, the personal representative cannot sell, mortgage or lease the property without the written consent of the surviving spouse, if any.

Order of the Probate Court

If there is a problem with the sale of a home or other real estate, it may be
necessary for the personal Representative to obtain the permission of the court to
sell the real estate.  What does this mean?  It means that the person in charge of the
estate must petition the court for an order approving the sale.  This means going to
court, sending notice to all interested parties, and having a court hearing on the
issue.  The probate attorneys at the law firm have experience doing this.

Personal Representative Conflict of Interest

Finally, the personal representative should be careful about selling the home to
themselves or his or her spouse, agent, attorney, or any corporation or trust in
which the personal representative has a substantial beneficial interest.  Any such
sale is voidable, unless:  (1) the Will or contract signed by the decedent expressly
authorizes the transaction, or (2) the transaction is approved by the court after
notice to all interested parties and a hearing, or (3) all interested parties consent to the sale after full disclosure.