PSA - Deceased Title Owner, Wife wants to sell
Investor · League City, TX · Member since 2014 · 31 posts · 13 votes
Hi,
I'm looking to purchase my second deal but I had a few questions about the contract with a deceased owner.
Ok, so a widow reached out to me wanting to sell a pair of properties in Texas, but it looks like her deceased husband is the only one on Title according to the county website.
1) I'm assuming the Title company will be able to work out the widow, survivorship of the property and legally she'll be able to sell it to me? Does the wife need a Death Cert.? What will the Title comp need?
2) I'm writing up the PSA and for the seller's name up top, do I put hers or the husband's name? Or both?
Thanks for all the help y'all! It'll be my second deal, and it's a sweet one, so any help will be greatly appreciated.
Andrew Flanagan
Houston, TX
Hi Andrew:
Your best bet is to have the title company run a preliminary title report to determine who the property owner is and how title is held. If the property is deeded in a way that title pass automatically to the widow, then the title company can most likely prepare the documents.
If however the property is not titled in a way that title passes to the widow automatically, the widow may need to initiate probate proceedings for the deceased husband. The underwriting department of the title company will let you know what you may have to do to complete your sale as if a probate proceeding is required. The title company will not issue you title insurance until the transaction complies with the law as they will be on the hook to make title right if they improperly close on your sale.
In your situation depending on Texas probate law, the Widow may have to petition the local probate court to be appointed as her husband's legal representative to complete your transaction. In many states including Texas, depending on the value of the husband's estate, there may be expedite processes to either get court orders that the property you want to purchase belongs to the Widow or to get the Widow Court authority to complete your transaction. In some cases a probate may not be required, and the Widow can execute affidavits indicating the estate is of small value and she is the lawful heir to her husband's estate to deal with the property.
Your best bet is to find out what the title company says and if they tell you a probate is necessary you can work with the Widow with getting her to start the probate process and be the first person in line to get your deal completed. I hope this helps.
Hi Andrew:
Your best bet is to have the title company run a preliminary title report to determine who the property owner is and how title is held. If the property is deeded in a way that title pass automatically to the widow, then the title company can most likely prepare the documents.
If however the property is not titled in a way that title passes to the widow automatically, the widow may need to initiate probate proceedings for the deceased husband. The underwriting department of the title company will let you know what you may have to do to complete your sale as if a probate proceeding is required. The title company will not issue you title insurance until the transaction complies with the law as they will be on the hook to make title right if they improperly close on your sale.
In your situation depending on Texas probate law, the Widow may have to petition the local probate court to be appointed as her husband's legal representative to complete your transaction. In many states including Texas, depending on the value of the husband's estate, there may be expedite processes to either get court orders that the property you want to purchase belongs to the Widow or to get the Widow Court authority to complete your transaction. In some cases a probate may not be required, and the Widow can execute affidavits indicating the estate is of small value and she is the lawful heir to her husband's estate to deal with the property.
Your best bet is to find out what the title company says and if they tell you a probate is necessary you can work with the Widow with getting her to start the probate process and be the first person in line to get your deal completed. I hope this helps.
@Rob Wells laid it out pretty well. If deceased husband is the only one on title, Probate may need to be opened as wife may not be the only one who has inherited the property. He could have left a will naming his children or someone else or a trust as the ones to inherit. If he did not leave a will then the law will say how the property passes. She may only get 50% and any children get the rest
Rob- Shouldn't the first question be whether a will exists as whom is on the title in Texas for a married couple is somewhat irrelevent?
With Texas law, my understanding is :
-Could be separate property of the husband(very unlikely) but possible. We at this point have no idea how long they were married and if he owned the property before marriage and if she contributed to the property. Worst case as a settlement with his heirs or a court battle is probable
-In the absence of a will and it is not separate property, she is at least 1/2 owner of the property with any children(no idea) owning the other half. There is no automatic transfer of 100% to the surviving spouse
-There is a will and she as the surviving spouse owns 100%. The probate court would give her authorization to sell and it would cost her +-$3000 or so for a simple estate
-A few other scenarios but unlikely
My advice is to consult an attorney. It can get very tricky, especially if there was no will.
To answer your question, the few times I've put in a contract like that, the seller is listed as "estate of so and so" or "so and so family trust". But that's after all the legal issues have been settled. Sounds like this is far from that.
The title company won't likely have time to "work out" the estate issues...they'll simply advise you what they need so you can work them out. I run into this scenario more often than not so I just get the property under contract (which may or may not be valid) with the suspected heir and then let the title company tell me what they need to insure title. The more information you can provide the title company the better, so asking the widow for information regarding a Will, any children from the widow's marriage to titled owner, any prior marriage by the deceased during the property ownership, etc.
@ Greg H., I am not familiar with the particular type of deeds available in Texas. However if Texas has a deed such as joint tenancy deed or transfer on death deeds as we have out here in California, the property as a matter of law would transfer to the remaining owners listed on the deed on the death of the deceased owner.
Title does matter as the deeds could be titled in ways that under state law would not need court approval or intervention. For example if title was to a trustee of husband's trust; in that case, the property would be subject to the terms of the trust and be administered outside of probate in most cases.
Fred Heller is right in that an estate attorney needs to review deal for Widow as we don't know how things are titled, is there a trust involved, is there a will and or if there is going to be fight over Husband's estate from family or anyone else. For Andrew, he could be waiting a while to get this property if there are any complications with Husband's estate. In any case where you buy property from an estate, you have to know if you are dealing with the one with legal authority to act. This can be tricky sometimes based on the circumstances.
The bottom line is the Widow may have unmarketable title to the property until court action is taken such as opening a probate. The title company will usually tell you this and then send you off to find an attorney to figure things out.
Get the contract and open title. This is where "investor friendly" really means something in deciding which title company to use. Some escrow officers are not as familiar with handling un-probated estates as others. A new escrow officer without backup will likely reject the file or freeze up. Good ones, who know what to do, can do a lot without having you or the seller hire one of us lawyers - in other words, there are a number of curative instruments to get you marketable title. Most commonly used is an affidavit of heirship (AH).
If it gets too dicey for the underwriter to feel comfortable issuing a policy, you will need to help the seller locate an attorney to open a probate case (because if the seller could have done it on her own, she would have by now). The goal is to get an order determining heirship (PDH) from the Husband's estate. Based on that, any title company will be able to close escrow and issue policy. You will have to assist the seller to get what the attorney needs, and it looks very similar to an AH. If the estate isn't worth much (<$50K), and no debts, small estate affidavit (SEA) might suffice. A PDH and SEA are court orders based on documents and hearing testimony. There are other ways to probate an estate, but these are the most common in trying to sell a house out of an estate.
Each attorney will be different, but the cost will be driven by how good your facts are (how long ago H died, # of kids from marriage, kids from outside marriage, # and availability of witnesses to family matters, etc.). The law is fairly straight forward, if you are used to working with genealogy. If someone comes out and contests the sale, that will drive up costs significantly.
The attorney works for the seller/heir. When I've taken cases like this, the investor-buyer usually refers the client to me. I can take payment from (almost) any party who isn't adverse to the client, with the understanding that the client is ultimately responsible. I have taken payment from the sale of the house. Sometimes the client covers expenses and my fees are paid at close. It just depends on how good the case is (i.e., likely that the client is named heir and can close).
Court costs to start is about $300, ad litem (court appoints attorney to represent unknown heirs) is $500-1000, serving parties is $75-100 per party. On top of that, attorney's fees run the gambit, but SEA is $500-1500, PDH is $2000-5000. Contested probate cases are almost universally at the attorney's hourly rate.
Lastly, going to probate isn't fast. Everything depends on the county and court's docket size. SEA can be 4-8 weeks. PDH is 4 months to 18 months, or more (contested). Your facts will be a driver here, too.
Andrew,
1. First thing to know is that the names on county records are not always complete. It is possible the widow is on title but the county record only had one name. The title company should find out who is on title.
2. If the widow is not on title then you need to determine if the home is in trust or probate. If it is a trust and she is the successor trustee then she can sell. If it is in trust but she is not the successor trustee who ever is has the power to sell not the widow. This happens a lot when there are children from a previous marriage.
3. If the house is in probate and not a trust and the widow is not on title then it is more complicated. The house can only be sold by the administrator of the estate. Again, it could be the widow or it could be someone else. Only the administrator has the right to sell, and the court has to give that person either full authority or partial authority. You will need to find out if the home can be sold outright or if it needs court confirmation. If there are multiple heirs to the estate then they all have to agree to the sale.
3. It is possible the seller is not even aware of all of this, but she might.
4. The name on the contract is the name of the person who owns the property. that again depends on where there is a trust or probate.
5, Start with the title company and get the info about who is on title and then find out if it is trust or probate and if probate has the estate been settled and the name change just not recorded yet. If that is the case then the title company will need the death cert of the husband and the letters or administration stating who has the right to sell in probate. If it is in trust they will need a copy of the trust.
Obviously I am not an Attorney nor have I ever played one on tv. However, my point about the deed being somewhat irrelevant in deciding will own the property relies in the fact that Texas is a community property state.
Barring a will which would clarify all:
The OP indicated that only the husband was in title. Does this mean it was his separate property ? Possible but he would have had to purchase before the marriage and never commingled. If they have been married for a long time this scenario is unlikely
If they purchased during the marriage, the wife is at least 50% owner regardless of who is on the title. The other 50% would belong to his heirs if any exist. I once tried to purchase a property where the husband had 12 heirs and each had hatred for the evil stepmom. Low $$ property where the heirs were going to get $1000 a piece after all was said and done. I gave up as most of them would have rather spent their share in legal fees to make sure stepmom received nothing
No mention that title was in a trust so no need to address a trust which would also have provided clarity