Here Are the Steps to Open & Close Probate - Posted by Elizabeth NJ
Posted by Elizabeth NJ on May 06, 2006 at 16:02:12:
You know I have to say this: Nothing stated herein may be construed as legal advice.
Here are the steps you must take to buy this property legally and without any question of impropriety.
No title company that I know of will permit a seller to close on this kind of deal because the seller does not own the property and the deceased cannot come out of the grave to execute a deed. The heir must have the probate court’s official approval. It’s a simple matter of opening and closing an estate.
I have literally walked heirs thru probate court to get them appointed as administrator of the estate to sell the property which is the only asset of the estate. The probate clerk will ask if you are the legal representative of Tom. If you are not, then Tom should just say you’re a friend. If you want an attorney to walk Tom thru this process, you can but it will just cost you more money.
Tom will go to probate court with you - no appointment necessary. He will need a certified copy of his mother’s death certificate, and a copy of his birth certificate to verify his lineage, and of course appropriate identification. I usually print out from NJACTB (the NJ state tax boards) the page referring to the property so the probate officer can clearly see the ASSESSED value of the property, because the bond will be issued based upon that value less any liens. By the way, it was the probate clerk who told me to use the assessed value, not my idea. The probate officer will have Tom fill out an affidavit regarding his lineage, the value [assessed] of the property, any and all liens against the property, and the difference will be the value basis for the bond that is required to be issued in Tom’s name. He’s a class A beneficiary so no estate tax will need to be paid. By the way, I would have Tom execute an affidavit in which he affirms that he is the one and only child from his deceased mother. It’s not required for closing, but keep it in your file. I’m a strong believer in backup documentation.
If you get to probate court early enough in the day and Tom has all his documents, you might get everything you need that day. The probate clerks are great & they will recommend a bonding company near the court. Take Tom to the bonding company, & he will present the documents the bonding clerk asks for, pay a fee and the bond is usually issued either the same or next day, depending on how backed up they are. Once the bond is issued, take Tom back to your probate clerk, present the bond, and he will be given an Order appointing him as administrator.
The Order authorizes Tom to do any and all acts necessary to dispose of the property. Tom’s signature block on the contract with you should clearly state that he is the administrator of the estate of so-&-so. I usually attach a copy of the order of administration to the contract so it’s clearly evident to anyone interested.
Let Tom know that you will be responsible for any and all fees in connection with his appointment as administrator [the cost of the bond and the fees to the probate court]. Your contract should clearly state that Tom will be reimbursed at closing for those fees if he paid them, and list them in the contract. If you advanced the fees, your contract should state that all fees in connection with his appointment as administrator were advanced by the Buyer [you], and that no fees are reimbursable to the Seller at closing. Tom will need his own attorney for closing because he is acting in a fiduciary capacity. I usually pay for that attorney because I hire one I’ve used myself, so there won’t be any unexpected events at closing. Tom’s attorney will have to execute certain documents required by the state relating to estate tax. Make sure your contract states the Buyer will retain an attorney for seller and pay for that attorney’s fees & costs at closing. I usually give my attorney a listing of all expenses/fees that I will reimburse to the seller/heir at closing and they are broken down on the HUD-1.
After the sale, take Tom back to the bonding agency & they will cancel his bond. Any reimbursement from them for any unused portion of the bonding fee will be to you if you advanced that fee. Then take Tom back to probate court & they will issue a document canceling his appointment.
And that’s all there is to it. My lengthy description of the process makes it sound quite involved, but the truth is that it is really very simple. Do this once, and you will wonder why you walked away from deals like this.
I don’t know what you offered Tom as a purchase price, but I would sweeten the offer a little to get him to probate court. And of course explain to him that no other investor/buyer is going to take the time to help him sell and profit from the property except you. Tell him you’re doing everything, all he has to do is show up and sign a few documents and he’ll make a lot of money.
I had a deal where none of the adult kids wanted to serve as administrator, so I prepared an affidavit which they each signed agreeing to permit their uncle to serve and to pay him a set fee from their proceeds of sale. They renounced their rights to serve [documents required to be executed by heirs with probate court], so I took him thru the process, we closed and everyone was happy. So, the administrator doesn’t have to be a direct heir, so long as all documents required by probate court are properly executed by the direct heirs, if any, relinquishing their rights through renunciation affidavits.
Also, IB, I keep blank copies of the probate court’s affidavits in my office. I don’t think they differ much for NJ counties, but if you want to see one, email me your fax number & I’ll fax the forms over to you on Monday.