Procedures for Selling Real Estate through Ohio Probate Estates (Part 2 – Land Sale)
Posted In: Estate Planning | Posted by: Arenstein & Anderson Co., LPA
Click here to read Part 1 – Testate & Intestate
Our firm is regularly asked by our clients to assist with the sale of real estate in Ohio probate court. This article provides a brief overview of the sale real estate in a probate estate through a land sale. Having experienced legal counsel to assist with the sale of real estate through estates is important for making sure that the transaction proceeds smoothly and properly.
When a person dies owning Ohio real estate that is either titled in the name of the decedent only, or is titled as tenants in common (as opposed to being titled as joint tenants with rights of survivorship), the title to the decedent’s real estate immediately vests by operation of law in beneficiaries who are entitled to inherit the real estate under the decedent’s Last Will and Testament (a testate estate). If there is no Will, the title to the decedent’s real estate immediately vests in the decedent’s heirs at law (an intestate estate). The rights of the beneficiaries or heirs to the decedent’s real estate are subject to divestment if the real estate needs to be sold to pay the decedent’s debts, or if the real estate is otherwise sold pursuant to a procedure below.
A way to sell a decedent’s real estate is through a land sale proceeding. This method can be employed if the sale of the real estate is necessary to pay the decedent’s debts. It can also be used when the sale of the real estate is not necessary to pay debts; however, any person or persons who hold in aggregate 25% of the interest in the real estate can stop the sale by filing a written objection.
A land sale action is a civil litigation proceeding that is very similar to a foreclosure. Land sale proceedings are governed by Ohio Revised Code Chapter 2127. They are complicated and it is strongly advised to be represented by experienced legal counsel in the proceedings.
The action is commenced by the executor or administrator’s filing of a complaint in the probate court, which names all beneficiaries or heirs and all lienholders as defendants. The defendants then have 28 days to respond to the complaint to assert their interest in the real estate. Once the pleadings have closed, the executor or administrator asks the court to issue an order permitting him or her to sell the real estate at either a private sale or a public sale.
A private sale involves the listing of the property for sale to the public by owner or through a real estate agent and requires that the sale price be for or in excess of the real estate’s appraised value. A public sale is a sale by auction either by the county sheriff or by a private auctioneer and requires that the sale price be 2/3 or more of the appraised value.
Once the executor or administrator obtains an offer to purchase the real estate through a private or public sale, he or she then must report the sale the probate court and must ask the court to approve the distribution of the sale proceeds to the lienholders pursuant to their order of priority. Any net proceeds of the sale are distributed to the estate to be first used to pay other debts and then to be distributed to the beneficiaries or heirs.
Although land sale proceedings are often the most time consuming and costly way to sell a decedent’s real estate, there are times when it is the only way to sell the real estate. Additionally, the filing of a land sale action allows the executor or administrator to stop making payments on any mortgage loans that encumber the property because the mortgage company cannot file a foreclosure action after the land sale case has been filed. This can be very helpful if the estate is illiquid since it allows the executor or administrator to retain control over the property in hope of maximizing the return without the fear of losing the property through a foreclosure.
About Arenstein & Andersen Co., LPA
Arenstein & Andersen Co., LPA, located in Dublin, Ohio, provides comprehensive estate planning and probate and trust administration services. A sampling of our services in these areas include preparation of Wills, Trusts, Financial Powers of Attorney, Health Care Powers of Attorney, and Living Wills; representation of executors, administrators, and guardians in probate court proceedings; representation of trustees in trust administrator matters; representation of beneficiaries in contested probate and trust matters; and preparation and filing of estate tax returns and estate income tax returns.
Posted In: Estate Planning