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How To Handle A Probate/Estate House And Other Inherited Real Estate
When settling an estate, some things can be simple and straightforward. Real estate is usually not one of those items. As an executor/executrix, it is your responsibility to manage and take care of any real estate until it is sold or transferred to the heirs. Taking care of real estate can be a significant expense to the estate. You will need to maintain insurance, pay taxes and the mortgage(s), keep utilities on, and repair anything (like a leaky roof) that can damage the property.
It’s a lot easier if the decedent rented where he/she lived and didn’t own any other real estate. In that case, you will just have to contact the landlord and make arrangements for moving stuff out of the property and a few other small details. However, if the decedent owned their personal residence and/or other real estate, things can get more complicated. Here are a list of items to consider when handling real estate that’s a part of an estate until you sell or transfer to the heirs:
Personal Residence (vacant) or Vacation Home:
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Cancel TV, internet, phone if not needed.
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Keep insurance in place. You should ask the insurance company to add you (executor) as a “named insured” and let them know if it is vacant.
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Maintain the property. Either you can do this but we would recommend hiring a landscaper to keep grass cut or someone for snow removal. It is crucial to make sure repairs are made so that nothing negatively impacts the value of the property.
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Making the house look lived-in is a good idea. You can put lights on a timer and potentially arrange for a housesitter.
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It may be a good idea to talk to neighbors to look out for the property. Also, a security system may prevent any break-ins. Changing the locks can’t hurt either.
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For a vacation home, you could hire someone in the area to look after the property.
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Pay property taxes.
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Pay mortgage(s) (if applicable).
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Pay utilities like gas, electric, water, and trash.
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Pay HOA fees (if applicable)
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Figure out what to do with all the belongings. Valuables need to be listed as assets. Other stuff needs to be disposed of, donated, or taken by the heirs. More often than not, heirs don’t want most of the stuff left behind. One way or another, it will eventually need to be dealt with.
Rental Properties:
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As the executor, it is your responsibility to keep rental property running smoothly. This can get really messy especially if you have no experience with rental properties so feel free to reach out to us with questions.
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Hopefully the decedent had a property manager in place to handle the operations. If so, get in contact with them to let them know the situation. If not, you are now the property manager. Alert tenants and give them your information so they can send checks to your address and call you with any issues. When the decedent was a DIY person who handled everything, this creates a lot of issues when they aren’t there anymore to keep things running. You may even want to consider hiring a property manager for the time being if it will be too much to handle.
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If you can find copies of leases, it might be a good idea to read over them to see how things are set up. However, if there’s a property manager, they should be handling this part.
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You need to pay all the expenses listed above in the personal residence section and make sure rent is coming in to cover those expenses.
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If tenants stop paying, you will need to evict them. Consult a local, experienced landlord-tenant attorney. It is better not to refill the properties because it will be easier to sell and it’s less you have to worry about. Then you can treat it like a vacant property and maintain it until you transfer to someone else.
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It isn’t easy to manage rental property, even for a short term. You goal should be to turn this over to the heirs as quickly as legally possible or sell it depending on what the plan is for the estate.
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Although there are more details, the tips above can apply to both residential and commercial rental property.
Summary
All real estate has to either be transferred to the heirs or liquidated and it can be a lengthy process. It is much easier if an estate plan was already in place. A good estate plan will avoid probate and make property easy to transfer to heirs or beneficiaries and have a clear path on what is to be done with everything including rental property. Either way, if you have any questions, feel free to reach out to us. We specialize in providing solutions to real estate matters, especially matters concerning estates. If you don’t want to deal with the hassle of cleaning out a property or dealing with tenants or even just need some guidance, we would be happy to help!