You are handling the sale of property out of the Estate of Sammy Seller. When the title exam comes in, you realize the examiner did not include any probate documents. Knowing you need to review the probate file, you reach out to him for copies. He responds that he’ll have to get back to the courthouse, but will have them in a few days. When you finally receive the probate file, you immediately start your review. You see that Sammy Seller died leaving a will, and that he had 4 adult sons. The will appoints one son as executor, and also grants the executor the power of sale. That’s good news, but as you continue your review, you see a serious problem. One of the sons has two very sizeable judgments entered against him. You know there will not be sufficient proceeds to pay off these judgments, and the closing is tomorrow. Can anything be done to save your closing?
Did you know that under Title Standard 13.1, those judgments do not attach to the property?
The Title Standard sets out three circumstances in which judgments against heirs do not constitute a lien on the land:
1. |
the sale is made by an executor pursuant to express authority in the will, and is made to parties other than the heirs; |
2. |
the sale is made by an executor with the unanimous consent of the beneficiaries under the will, as evidenced by a court order; or |
3. |
the sale is made by an executor or administrator given the power of sale by court order with the unanimous consent of the heirs. |
When you are handling a sale out of an estate to an unrelated third party, and the executor has been given the power of sale, judgments against heirs/devisees do not attach to the real property. Because your transaction is a sale by the executor, and the executor has been given the power of sale, your closing can go forward without paying off those judgments.
Practice Tip: If you are handling the sale of property of a deceased owner, and the estate has not been probated, judgments against heirs do attach to the property and need to be paid/released. If the owner died more than 3 years ago, and you intend to proceed with affidavits of descent and deeds from heirs in lieu of probate, be sure your title examiner has checked for liens against all of the heirs
Courtesy of First American Title
