Motivated seller can't afford probate, how to structure a deal?

9 Replies

So I found a lady who wants to sell her dad's house but she can't afford the 2k to pay a probate attorney to get the house put in her name. My solution is to have my brother, who is an attorney, do the probate work for her and once its in her name I'll buy the house from her. My concern and question is how to ensure that she sells me the house after probate is complete. What would keep her from walking away after the house is in her name leaving me stuck to compensate my brother and no deal for me? I've read other forums her on BP about sellers not showing up to sign at closing and the only recourse is to sue, which means more money for the lawyers and less for me, lol. Anyone have experience with a similar situation? 

Nolan,

How about doing two things. 1) A purchase and sale contract that specifies how the transaction is going down, backed with 2) a signed quitclaim deed held in escrow pending the probate action. 

If she doesn't hold up her end of the bargain,  your recourse is to file the deed.  It should be in the setup of the p&s contract. 

If you brother is an attorney,  he should be able to help as well. I'm not, so don't rely on this as legal advice.

Hope that helps. 

Good luck,

Jim 

@Nolan M. My initial thought is to be concerned about brother having a conflict here.

And I don't see how title properly transfers without a deed signed by a party with authority... which is nobody right now. Recording a pocket quitclaim has lawsuit written all over it... doubt your bro wants to be wrapped up in it.

@Nolan M.

Before the probate process runs its course no one would be able to be sure that the property could be sold for the amount you have in mind.  The probate needs to occur to identity creditors, before the property is sold.  What you’re explaining puts the cart before the horse.

It’s possible the house has liens beyond its market value in which case you could still end up purchasing it but only after the probate court allocates proceeds to the creditors of the estate.

The heir(s) most logical next step is to get an administrator appointed and open the probate.

Happy to PM more specifically.

Two words.  "Subject To".  Have them sign a contract that spells it all out and makes it "subject to" that person having the legal ability to sell the property.  I AM NOT AN ATTORNEY.  THIS IS NOT LEGAL ADVICE.  (Just a well worn opinion.)

Been through this and about to close a deal in a couple days as well. Lots of factors involved. They will do an appraisal of the property when the owner of that property died and if the appraisal is under 150K you can do a terms of succession, which is much faster than probate and costs a lot less and you will have a lot less competition with people contacting the family members. Also is she the sole heir to this property of the previous Owner? Does she have a brother? That could become an issue as well. Like @Tom Gimer said, you cannot have anything binding for the property if it is not in her name. You will not be able to open escrow at all till it’s in the heirs name. I would pull a title report prior to even paying for the lawyer to see if you can rectify problems on there as well. I did write up my own agreement that was pretty detailed about ensuring the sale of the property to myself after I pay lawyer fees and property goes into her name and she signed it and my lawyer filed it with the file but it’s not fully binding and further action would have to be done if she broke the contract. Sit down with heir and explain everything with her and feel her out and have her sign something and just go from there. Other people will contact her in probate process though, I can guarantee that.

Thanks for all the advise, this gives me a good starting point. My brother is a new attorney so this will be a new experience for him as well. According to the seller there are no other creditors and she does have two siblings who are on the same page, we will see. The ARV for the house is about 130k and she wants 50k since it needs extensive work. From what I'm reading AZ has a quick probate option because the estate is so small, hopefully we can pull it off. Thanks again!

@Nolan M. "We"? 

As a new attorney your brother is stepping into a potential mess. His fiduciary duty will be to the estate, the same estate you'll be trying to pay less than FMV, and as such your interests will be directly opposed. The standard is the appearance of a conflict... here you may have actual conflict. Tell him to dust off the Professional Responsibilty textbook.

@Tom Gimer Thanks for the advise. After doing more research it looks like I don't need an attorney after all. The estate is small enough that it qualifies for the small estate probate exemption here in AZ. I will still need to do some legwork, there are three siblings and one of them is in  prison so I'll have to have him sign power of attorney over to his sister. This will be a good learning experience!

@Nolan M. In addition, just so you are aware, if anyone has any  liens from creditors and they are included on the paperwork, these will be taken out of the sale. Reducing how much money heirs will receive. Had this happen before. For instance, child support is a big one. Anyone can sign a waiver to inherit. Depending on which estate is filed, you may be able to avoid it. You can pm me if you'd like. 

This is not legal advice and I am not an attorney. 

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