Can Creditor Sell Property as Admn. of Estate? - Posted by IB (NJ)

Real Estate Investing
#1

Posted by Kristine-Ca on August 12, 2007 at 21:40:37:

Rick: I’m in agreement with your attorney. It’s not possible for
someone not to have heirs. Succession covers everything and
everyone. It’s just a matter of identifying and finding those heirs. And
how much effort is enough? When you have to go a few generations
back, it’s often too many heirs to make the average SFH deal make
sense.

So as to serving as Administrator as a creditor, I can imagine such an
administrator not going as far as…lets say I would. The
administrator will get their claim and Admin fee. And do all the work
to complete the probate. But how hard are tHey really looking for
heirs? My guess is that the court is complicit in this unless the values
of the estate are very high. Kristine

#2

Can Creditor Sell Property as Admn. of Estate? - Posted by IB (NJ)

Posted by IB (NJ) on August 09, 2007 at 20:58:09:

Came across a property in foreclosure (1st mortgage). Looked into it and found that the owner is deceased and the probating of his estate has been initiated by a creditor. Apparently it’s the funeral director (FD) who’s owed roughly $14k in funeral expenses. The FD states in the Application For Letters of Administration that he is unaware of any heirs at law or next of kin.

The case is pending so the fun. dir. is not officially the admn. yet.

What happens if this guy becomes Admn.as a creditor. Will he be able to sell me the property?

If I find an heir or next of kin, can they intervene after the fact and become the Admn.?

Ib

#3

Re: Can Creditor Sell Property as Admn. of Estate? - Posted by Kristine-CA

Posted by Kristine-CA on August 09, 2007 at 22:27:53:

Rick Harmon can give details. But yes a creditor can become an
administrator. Creditors are not first in line to serve as administrators,
but can petition the court to do so when no one else does it.

Technically, the Administrator is supposed to look a little harder for
heirs. If he’s the funeral director, who hired him to do the funeral…

Yes he can sell to you but I don’t know NJ law and it’s requirements of
those with Letters.

Yes an heir can come forward and intervene to become administrator.
The court decides on that one.

If it were me I would look for heirs and buy their interest in the estate.

That being said if you found all this info in a court file, be aware that
there are heir hunters on it too. Their angle is to find the heir(s)/bene
(s) and make a deal where by they will tell them about their inheritance
if the heirs will sign docs giving certain percentages of the inheritance
to the heir hunters. These are no small percentages. There is nothing
better to an heir hunter than a file that says no known next of kin.

Go get 'em IB. If you find them first, you and the heirs will come out
ahead. Kristine

PS 14K is a pretty small sum for a creditor to probate an estate. What’s
the value of the property/estate, do you think? My guess is that FDs
know the details of the assets and are doing it for the Administrator’s
fee as well. In fact, FDs may well be professional administrators…
Kristine

#4

Thanks Kristine and Rick… - Posted by IB (NJ)

Posted by IB (NJ) on August 10, 2007 at 06:49:42:

I guess I’m an ‘heir-hunter’ then {Don’t worry Ben, this is not a tax foreclosure - lol}.

Kristine, your statement regarding not telling the heirs about their inheritance until I get an agreement, is that an effective approach? I usually approach the heir and let them know the details with the offer to help them probate the estate so that I can buy the property. I never tried the other approach and don’t want to do anything that appears somewhat ‘slick’. Your thoughts?

Personally, with the location of the property, I estimate it to be worth about $325k in As-Is condition. Maybe $400k when it’s said and done. Those are MLS numbers. Obviously, I’m looking to buy it less than fmv.

Thanks again,
Ib

#5

Re: Can Creditor Sell Property as Admn. of Estate? - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 10, 2007 at 06:34:09:

I agree with yur assesment, Kristine. Absent any more details, there’s not really anything to add to your comments.

It’s possible that IB could buy the debt from the creditor and try to get substituted in as the successor administrator however he’d be held accountable for selling the property for fair market value or document the heck out of it if that’s not possible. If an heir or an heir chaser got involved, they’d really hold IB’s feet to the fire on that, too.

Better to cut you best deal with the current admin and be bonafide arm’s length purchaser. Maybe he could get creative on the terms side of the deal.

I hope the IB keeps us posted.

#6

Re: Thanks Kristine and Rick… - Posted by Kristine-CA

Posted by Kristine-CA on August 10, 2007 at 08:47:09:

You are I are real estate investors and we buy interests in estates which
own real property which is NOT the same thing as heir hunting.

Heir hunting is specialized, mostly done by private investigator teams.
Their goal is not to acquire property but to cash in on money that
would otherwise not get distributed. Proceeds from an estate without
distributees end up escheating to the state, so the heir hunters are
looking for someone who is line for the money to “team up” with.

Heir hunting is legal but is fraught with legal issues. One of which is
acting as a PI when you are not licensed, etc. Some states come down
really hard on this. Disgruntled heirs is another. They are thrilled to
learn of a possible inheritance and sign the agreements, but then when
they later find out that the heir hunter is getting 30% (or whatever) of
"their" $2M inheritance, then they counter sue.

Your post about the Funeral Director really got me thinking about FDs
exposure to estate information. My guess is that the 14K owed to the
FD is not why he is probating the estate. My guess is that the estate in
question has more assets than just the house–cash and other assests
as well. Since the Adminstrator will get a fee based on the value of the
estate, he is basically get paid to collect on his 14K. His expenses will
be reimbursed as well.

Kristine

#7

Re: Can Creditor Sell Property as Admn. of Estate? - Posted by Kristine-CA

Posted by Kristine-CA on August 10, 2007 at 15:35:46:

Hi Rick. I doubt IB could buy the debt from the funeral director. At
first I though 14K was too small a debt to deal with vi a probate. But
as Adminstrator, the FD would recieve about 15-20K based on the
value of the real prop. Plus expenses. And who knows if there are
other assets. So getting paid to collect on your business’s bad debts
isn’t a bad deal.

After reading about some of the services that FDs provide (and about
the FDs that have gotten in trouble with the Probate courts), it makes
the funeral business look as unsavory as ever. Kristine

#8

Re: Thanks Kristine and Rick… - Posted by IB (NJ)

Posted by IB (NJ) on August 10, 2007 at 08:57:31:

Good point regarding the heir hunting thing.

I’m sure probating the estate is used as another income stream for FD’S, although this is the first time I’ve come across it in this state.

Ib

#9

Re: Thanks Kristine and Rick… - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 10, 2007 at 23:06:12:

In CA, Funeral Directors will typically request the public administrator probate the estate and pay the creditor claim for funerial expense. Funeral Directors make their income by doing that, not by administering probate estates. Just as investors ought to invest and let rehabbers rehab…

I’ve been the P/R plenty of times and it’s a God-forsaken job to fulfill the duties and listen to the whining heirs (bad heir days). I’ll bet the FD would rather do three easy “intakes” than be the P/R any time.

Remember to focus on the part of investing that pays the greatest return and most satisfaction, with the least work, risk and expense.

#10

Re: Thanks Kristine and Rick… - Posted by Barry (FL)

Posted by Barry (FL) on August 11, 2007 at 19:49:27:

“I’ve been the P/R plenty of times and it’s a God-forsaken job to fulfill the duties and listen to the whining heirs (bad heir days). I’ll bet the FD would rather do three easy “intakes” than be the P/R any time.”

ROTFLMAO!

I take it that “intakes” don’t complain about their hair or is that heir. Could be both I suppose. Come to think of it, I can’t complain about mine either… hair that is.

#11

Re: Thanks Kristine and Rick… - Posted by IB (NJ)

Posted by IB (NJ) on August 11, 2007 at 15:07:23:

Thanks Rick for your comments.

Questions: The FD can still become Admn. of the estate and collect a fee for administering the estate, correct? What if, as it might be in this case, there are no heirs and/or next of kin? Will that make the Admn.'s case easier?

I’m actually thinking about acquiring a few junior liens/judgments/beneficiary interest and becoming Admn. of an estate of two should the opportunity present itself. Your thoughts?

Ib

#12

good one - Posted by Natalie-VA

Posted by Natalie-VA on August 11, 2007 at 13:14:37:

Now that’s a good quote:

“Remember to focus on the part of investing that pays the greatest return and most satisfaction, with the least work, risk and expense.”

–Natalie

#13

More plays - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 12, 2007 at 16:11:13:

IB - I like it. Just a thought:

Think about how you would want someone else reviewing this case file to think about the creditor claims. They might sense that you were a little more generous if all of those claims were now in the name of the administrator, right?

Consider using multiple entities to purchase those debts and submit creditor claims. It’s not that anyone would dare misrepresent the correct balances. It’s that they might otherwise not pass the average person’s “sniff-test.”

Best to avoid the issue of conflicts of interest from ever coming up.

Lastly, my #1 probate attorney tells me that it’s extremely rare that a decedent really has no heirs. He ought to know because he probated the largest intestate estate in Calfironia’s history a few years back. Sadly, I passed on that one after I was given the chance (and before knowing that there was anything more than a 2 bd. shack of a house in the L.A. suburbs.

There was. The $7,000 stock account turned out to be worth between $90 - $120 Million, depending on the monthly statement. Ultimately, two elderly heirs were found in an Eastern European nation who used the money, in part, to re-construct their church which which suffered major damage during WWII bombings.

I like the ending of this story because at least the money went to a good cause.

My best “missed that one” story…your turn!