Selling Deceased Estates — 4 Reasons Agents Can Be Sued

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If you’re used to working with sellers, selling deceased estates has some risks you may not be aware of. While some parts of the process are the same, there are some key differences you need to know about. Here are 4 top reasons agents get sued when selling deceased estates or in probate sales. 

1. Failing to follow due process

Probate sales can be complicated. Agents who work on selling deceased estates need to be familiar with probate sales and the correct process to avoid issues that could lead to a lawsuit. 

If the deceased has debt, the estate may be liquidated to pay those debts. The estate representative (executor or administrator) usually hires the real estate agent to list and show the property. Anybody can make an offer. Once an offer is made, the estate representative must petition the court to sell the property and follow the correct procedure to notify heirs or beneficiaries of the estate. If there is more than one offer, parties generally have to appear in court, and the highest bid is accepted. 

The documents used in a probate sale differ from a typical sale and may require an attorney. Make sure you don’t overstep and give legal advice. Instead, refer clients to the proper expert. 

In some states, even when an offer is progressing through the courts, the listing stays live and other offers could outbid a buyer. Failure to inform a buyer of this process or telling them they’re all set when they aren’t could lead to a lawsuit. 

2. Failing to verify the correct legal owner of the property

When somebody dies, a family member may step in and start maintaining a property and paying taxes until the family is ready to sell it. But unless the property was deeded to that family member, he or she is not the rightful owner and cannot sell it. And this does happen.  Generally, the person trying to sell the property thinks they have the right to do so. But if they don’t, and you don’t verify the owner, you could be liable. 

There are other cases where the ownership may be unclear, which could cause delays in the process or even an invalid sale. 

3. Underestimating costs and timelines

Probate sales (sales when the homeowner has not named an heir for the property in a will or trust) may take longer and include unanticipated costs. If you underestimate the process and expenses related to the sale and provide poor advice, clients may sue. 

The process could take 6–12 months. Part of the timeline is simply the legal process, but relative disputes or debt can delay closing too. 

During that time, mortgage payments, utilities, real estate taxes and other expenses related to the property need to be paid. Other expenses could include securing the house (new locks or security codes), appraisal, and property clean out. Fees may include court fees, broker fees, executor fees, and title fees. All of this adds up. 

4. Including items that will be removed

What comes with the house can be even trickier when the owner is there to say what’s staying. If you indicate to a buyer that furniture or fixtures are part of the house, but a family member or other party has the right to remove them and does, the buyer is not going to be happy. It’s important not to make assumptions. If you don’t know the answer, say so and double check. Get in writing what is staying in the house. 

Are You Covered? 

Selling deceased estates or probate sales have a lot of wrinkles that could lead to you getting sued. One thing you can do is educate yourself about the process and work with experts in the process. Another is to make sure you have the right E&O coverage. CRES can work with you to make sure you have the coverage you need. 

At CRES we want to hear from you before there’s a lawsuit. That’s why CRES Real Estate E&O + ClaimPrevent® gives you access to pre-claim legal advice from qualified attorneys 7 days a week. 

Contact the friendly team at CRES at 800-880-2747 for a confidential discussion today. 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published July 28, 2021

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