New to Real Estate · Boston, MA · Member since 2021 · 8 posts · 4 votes
Hi all - I’m in the midst of my first deal and have hit a snag. I have an accepted offer on a distressed single family home in East Texas. My realtor had learned from the listing agent that the owner of the home had passed away and her daughter, the sole next-of-kin, was the one selling it. It was a cash offer and our original closing timeline was 30 days. It’s now going on 1.5 months and we haven’t closed yet because a) the title company determined that the deceased owner hadn’t paid 5 years of back taxes on the property, and is still in the process of figuring out if there are any outstanding liens related to that, and b) the deceased owner did not have a will and the daughter’s lawyer is still working on settling the probate case. The closing date has been pushed back twice already.
With this being my first deal aside from my own home purchase, I have never dealt with probate, although I know it can be a very prolonged process. No one is able to estimate how long it will take and I am not interested in waiting around for this property for an indeterminate amount of time while other potential deals come and go. I am well past the 10-day option period to back out of the deal without penalty, so I assume I would forfeit my escrow deposit if I walked away now. Does anyone have any insight that might benefit me? Thanks!
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
4y
Maybe I just look at things differently. This could be a long process so if I can get a long extension with low earnest money I would be golden. 6 months from now the property could have appreciated and I made money for my time. If not, I walk away. I would put up $500-1000 for almost any good deal in this scenario
Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
4y
If the seller couldn’t close in the agreed timeline, depending on your language, you have a bunch of options, which you should cover with your attorney. The Executor can file a request to the court, to get authorization to sell the property, but that may not speed things up. How did you not know this was probate, and apply specific language.
Unfortunately I am not experienced with probates and I am sure someone from the community will help you with more information I just wanted to throw something out for you.
I would use this situation in your advantage by asking for "concessions (lower sales price)" from the seller once the probate is done. I would back out of the deal right now in order to have capital to invest in something that could potentially pop out while you are waiting, but keep your relationship with the seller and tell her that whenever the probate is done, she can reach out to you. When she reaches out you can tell her that you were "waiting" for her and negotiate a lower purchase price.
New to Real Estate · Boston, MA · Member since 2021 · 8 posts · 4 votes
4y
I definitely wouldn’t have offered on the house if I had known it was in probate; neither the listing agent nor my agent mentioned that, they only said that the house had originally belonged to the mother who had died and her daughter was now selling it.
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
4y
It would depend on what the contract states and how much longer you're both willing to agree to extend. I'm not a lawyer, no legal advice, but I would think your agent would know what steps to take to find out if seller can perform any time soon and, if not, I'd figure out your current expenses and send a release asking them to return your deposit and reimburse you for any due diligence expenses you've already incurred as you were willing to close as contract stated -- they are the ones with the issue tying things up. I recently had one delayed due to an issue with one of the heirs not disclosing they were in the middle of a bankruptcy, and their attorney let us know it would be at least 2 months to clear it up between bankruptcy court and probate, but my buyer was fine waiting until it cleared up, and we closed as soon as their side took care of it.
I definitely wouldn’t have offered on the house if I had known it was in probate; neither the listing agent nor my agent mentioned that, they only said that the house had originally belonged to the mother who had died and her daughter was now selling it.
Hard to believe two Realtors couldn’t figure that out. Every offer in probate must be conditional to the seller receiving the grant. That is to protect the seller. If you have an agreement that does not have this, before you do anything, sit down with your attorney, as you may hold a winning ticket to the lottery.
Hi Sara, the first thing I'd probably look at is, has the seller been designated by the court as the estate executor (executor typically has the authority to sell the house)? Typically an executor is named in a Will, but there isn't a Will here.
Regarding tax liens... you're right to be focused on this. I'd remain focused on that. Call the county treasurer's office, or visit them in person, to obtain an accurate picture of what's going on here with the back taxes. Specifically, you want to know if the treasurer has a tax sale scheduled for the property. Also, call the county assessor to identify, who last paid the property taxes. You want this to be the homeowner on the title. In this case that'd be the lady that has passed away. What you're trying to identify here with this step is this, if the tax lien has been sold, you'd likely see that someone other than the homeowner has made proeprty tax payments for the property.
It doesnt sound as if there's still an active mortgage on the place, with the taxes being so far behind. That said, you've likely checked for a mortgage already through the title search, but if not, you need to know for sure if one exists, because if it does, that still needs to be paid off monthly, even with the owner having passed. Otherwise a mortgage lender can still foreclose.
If it were me, I'd take these steps...
1. Look into the property taxes. With tax sale being the focal point.
2. Get a full title search with insurance and identify all liens (sounds like you did already)
3. Google "county name where property is located" followed by probate attorney. A probate attorney in that county can probably tell you what's going on with the case and may have more access to the probate case documents than the general public. You could also ask the attorney to reach out to the attorney representing the family in probate to get a clear picture of what's going on with the case. You can ask them for their general sense of how long it may be before you can purchase the property (provided the title is clear). Ask the attorney to be clear about their fees up front and let them know you're prepared to walk from this deal already.
Last but not least you can also run the title search yourself through the recorder of deeds for the county. I wouldn't do this in lieu of paying a professional title company, especially for a cash investment, but you can do some of your own homework on the property there, in addition to the professional title company's search. Depending on TX law, you may be able to view some of the court case documents yourself directly as well, whether online or in person at the courthouse's computer systems. You could call the county "clerk" to find out. Good luck!
Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
4y
did you use a standard state of Texas purchase agreement? If so there may be language in the contract regarding being able to cure the seller. If they don't cure the breach then they have x number of days to do so and if they don't you have the legal right to back out AND get your earnest money back. In Arizona a cure notice is 3 days.
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
4y
Why wouldn't the title company consider an Heirship Affidavit instead of going through the probate process (unless probate was already initiated)?
IF you don't formally extend the closing date in writing, and assuming you used the TREC contract form, you should be able to walk without penalty since seller failed to close or even provide clear title as required by the contract.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
4y
@Sara Walters I am not an attorney and this is not legal advice for your particular situation.
In general another party cannot keep your deposit if they haven't honored their part of the contract. If you want to walk they should give your earnest money deposit back.
Hi all - I’m in the midst of my first deal and have hit a snag. I have an accepted offer on a distressed single family home in East Texas. My realtor had learned from the listing agent that the owner of the home had passed away and her daughter, the sole next-of-kin, was the one selling it. It was a cash offer and our original closing timeline was 30 days. It’s now going on 1.5 months and we haven’t closed yet because a) the title company determined that the deceased owner hadn’t paid 5 years of back taxes on the property, and is still in the process of figuring out if there are any outstanding liens related to that, and b) the deceased owner did not have a will and the daughter’s lawyer is still working on settling the probate case. The closing date has been pushed back twice already.
With this being my first deal aside from my own home purchase, I have never dealt with probate, although I know it can be a very prolonged process. No one is able to estimate how long it will take and I am not interested in waiting around for this property for an indeterminate amount of time while other potential deals come and go. I am well past the 10-day option period to back out of the deal without penalty, so I assume I would forfeit my escrow deposit if I walked away now. Does anyone have any insight that might benefit me? Thanks!
That's a shame. In this case, it appears the seller (daughter) listed for sale in bad faith, as she technically does NOT own the property until probate is settled. If there is no will, probate *can* go for up to 2+- years, usually around 6-12 months. If there is a will, it can still take 1-6 months, easily (and I've seen a few still go over a year). Find out if there is a will, to help give you an idea. I would walk, and yes- you should get your earnest refunded. Talk with your realtor. If you don't have a realtor- 1) Use a realtor next time 2) Run your paperwork by a real estate attorney and have them write a cure notice letter, and possibly also an earnest refund letter and move on.
The other option is to wait- which could take a long time.
Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
4y
assuming I have contractual language that supports me, I would view this as an injury to my negotiated position, and pursue it as such. I could release and walk away, but I if I've put effort into a deal, I expect performance, and penalize non performers. Is it worth it often comes down to how concise your language is. IF you have supportive language, don't let non performers steal away your investment efforts.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
4y
Maybe I just look at things differently. This could be a long process so if I can get a long extension with low earnest money I would be golden. 6 months from now the property could have appreciated and I made money for my time. If not, I walk away. I would put up $500-1000 for almost any good deal in this scenario
Investor · Canada · Member since 2021 · 38 posts · 29 votes
4y
@Dwayne Poster this exactly. Probate is a common thing but should have been addressed explicitly in the contract. Did you use a realtor? Up here we would crucify a Realtor who tried to sell a property subject to probate before they knew it could be sold (pending probate of course).
Investor · Canada · Member since 2021 · 38 posts · 29 votes
4y
@Sara Walters I replied to Dwayne above but the listing agent should have made it subject to probate and failing that, your agent should have caught it. That said, probate isnt normally a big deal unless there is some in-fighting. If they missed the closing date though I would speak with your lawyer about your options.
@Dwayne Poster this exactly. Probate is a common thing but should have been addressed explicitly in the contract. Did you use a realtor? Up here we would crucify a Realtor who tried to sell a property subject to probate before they knew it could be sold (pending probate of course).
Yes, both I and the seller used realtors. I asked my realtor why we hadn’t been told about the probate from the beginning. My realtor says she was not aware it was a probate situation until the seller missed the closing date. When she asked the listing agent why the house was put on the market before the probate was settled, the listing agent said she “thought it was.”
@Dwayne Poster this exactly. Probate is a common thing but should have been addressed explicitly in the contract. Did you use a realtor? Up here we would crucify a Realtor who tried to sell a property subject to probate before they knew it could be sold (pending probate of course).
Yes, both I and the seller used realtors. I asked my realtor why we hadn’t been told about the probate from the beginning. My realtor says she was not aware it was a probate situation until the seller missed the closing date. When she asked the listing agent why the house was put on the market before the probate was settled, the listing agent said she “thought it was.”
Sorry to hear that. Sounds like a bad agent on the other side. Definitely speak to a lawyer about the next steps.
Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
4y
A case in point. My seller was told probate could take a year, so he rented the property. When grant was issued, he called to say he couldn’t deliver vacant. I said no problem, you pay me a portion of that rent every month you are unable to uphold the agreement, and no rush, we can do this forever. 3 months later we were able to close with a price reduction of that rent.
If I was purchasing your property as investment income, and the seller is delinquent, I would notify everyone involved that I will be taking action. What action is up to you, considering your language. If you intended to rent, then market rent is realistic. The seller, if given bad advice would then go after their Realtor. Your Realtor wouldn’t have known, but someone should have pulled title, so a judge may spread out culpability. Often, the Seller will be happy to renegotiate price to mitigate larger action.
Real estate is a business of contract. You use contract language to control your interests. Understand that if you violate a contract, you will be subject to penalties. Poor contract language provides a gateway for attorneys to draw away value, so the better skilled you are at contracting, the better business person you will be.
In the end, you might walk away to avoid being leveraged by an attorney, but while you are in the drivers seat, try out a few maneuvers to see how it feels.
Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
4y
Another way to consider this is that the listing Realtor has erred, and if you let them off the hook, they will miss s valuable lesson. Make no mistake, from what you’ve said, this seller could find themselves in a very difficult position. Consider it tough love.
@Guy Gimenez because legally without a will, all property has to go through probate. This allows the for debtors or other relatives to come forward who might be entitled to the property as well.
They might have other children that were not disclosed to the child that is selling the house. This is one of the important reasons to have a lady bird deed in states that allow it, or a proper will to avoid probate.
Medicare is one of the biggest debit collector against properties that after passed on, they want their money back.
@Guy Gimenez because legally without a will, all property has to go through probate. This allows the for debtors or other relatives to come forward who might be entitled to the property as well.
They might have other children that were not disclosed to the child that is selling the house. This is one of the important reasons to have a lady bird deed in states that allow it, or a proper will to avoid probate.
Medicare is one of the biggest debit collector against properties that after passed on, they want their money back.
I've closed probably a hundred deals in Texas, with title insurance, without the probate process. Affidavits of heirship will suffice in most instances. No such law in Texas.
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
4y
Heirship affidavits are not a panacea and will only be relied on by a title underwriter in limited circumstances. Check with the title agent you're dealing with and confirm they've already checked with the underwriter and have been told not to rely on one to issue a policy w/o exception for lack of probate for this sale.
Heirship affidavits are not a panacea and will only be relied on by a title underwriter in limited circumstances. Check with the title agent you're dealing with and confirm they've already checked with the underwriter and have been told not to rely on one to issue a policy w/o exception for lack of probate for this sale.
I will assume you are not familiar with how things are done in Texas as an Heirship Affidavit as @Guy Gimenez stated is used often with smaller estates. I have had a title company is several instances create the Affidavit themselves in order to provide a title policy without an exception. I had one years ago with 8 different heirs
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
4y
I'm not sure what your definition of "familiar" is but I think if you looked at some of my earlier posts on BP or my Linkedin profile, you'll see I have about thirty years' experience handling title insurance claims for various underwriters, many of which were in Texas. Perhaps the wording of my opinion that "Heirship affidavits are not a panacea and will only by(e) relied on by a title underwriter in limited circumstances" was not as clear as I would have liked, so here is a link to an underwriter's manual that sets out requirements for its agents' reliance on affidavits in general.
If you take the time to read it, you'll come across this passage:
A well-drafted affidavit of heirship will:
1. thoroughly review relevant family facts, including whether or not the deceased died with a will, the names and addresses of all heirs and other parties in interest, including their relationship to the deceased and (if relevant) their marital histories and whether or not they had children, the goal being to clearly map out the deceased’s line of succession with reference to applicable sections of the Estates Code;
2. identify the affected real property, since this is how county clerks are able to record the instrument within the intended chain of title (it is astonishing how many affidavits of heirship fail to mention any property at all, making them of dubious value); and
3. reach a reasoned conclusion as to the identity of the heirs and the amount of their respective interests. The affidavit should end with a positive assertion, for example: “Pursuant to Estates Code Section 201.001, I therefore assert that I am the sole rightful of John Jones, deceased. Accordingly fee simple title to the subject property vested solely in me and no other persons at the time of the decedent’s death.”
I think you might agree that are probably many circumstances where the situation will not lend itself to the use of an affidavit and therefore it is not a panacea.
pan·a·ce·a[ˌpanəˈsēə]
NOUN
a solution or remedy for all difficulties or diseases:
It's also possible that my years of resolving title insurance claims has given me a jaundiced view of how underwriter's procedures are interpreted by agents. For example, I just did a quick search for Texas Appellate decisions that reference the term "heirship affidavit" and this 02/2022 decision came up first of 78:
While not directly on point since the issue involved whether a Texas court has jurisdiction over a non-resident for the purpose of determining the proper distribution for the proceeds of a decedent Texan's estate, the first thing I noticed when reading the decision was the heirship affidavit relied on by the title agent, was given by the surviving wife of the decedent who was entitled to a share of the estate. A clear violation of what I believe would be of any underwriter's requirement the affidavit come from a disinterested third party. I think it would be interesting to see how the cited suit is resolved.
While a title agent may be comfortable in relying on an affidavit for property with eight heirs in a smaller estate and you might be willing to accept a policy w/o exception because you're insured, I was recently called to testify in a suit filed in a claim I handled five years ago. Of course the insured is unable to sell or refi the property while the litigation is pending, but if you're willing to assume that risk it's your choice. As an aside, that's not the record for the longest title claim I've ever handled.
Why would I go to one's LinkedIn? HA is the first place I would go in this situation every time as it is obviously the quickest and simplest solution if the required criteria appears to have been met
As to the suit you reference, it was brought due to a title company distribution error. The argument seems to be jurisdictional in nature which at this point seems to have nothing to do with the subject at hand. It was good reading though.