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Three Real Estate Title Traps Involving Probate

In the state of Massachusetts, a probate is required to properly distribute the assets of someone who has passed away. Probate is the process of when a decedent leaves assets to distribute, such as real estate properties and financial investments. This process ensures that ownership of the property will be transferred correctly and distributed amongst the decedent’s heirs at the time of the death. The personal representative, traditionally a family member, is charged with administering the decedent’s estate. The representative may divest the devisees/heirs of their title through the sale of the real estate via a power of sale in an approved will or by selling the property pursuant to a license to sell. The probate may be completed through a formal or informal probate administration. Taking title to real estate from a probate estate may present challenges and possible pitfalls to receiving a good title and this article will focus on three title traps associated with probate.

Title Trap 1: Informal vs formal probate

On March 31, 2012, The Massachusetts Uniform Probate Code (MUPC), which affects almost every aspect of the laws of wills and the administration of estates, took effect. One of the purposes of the MUPC was to make it easier and quicker to probate an estate in Massachusetts. Under the MUPC, estates may be probated either through a formal or an informal process.

  • The formal probate is a judicial proceeding that resembles the system used prior to the adoption of the MUPC and requires a formal notice to be ordered by the Probate Court. A formal probate is typically a longer and more expensive process that is often used when there are 1) disputes about the will, 2) an heir or beneficiary is a minor or incompetent, 3) specific legal questions need resolution, or 4) a prior informal probate is insufficient.
  • An informal probate is a quicker and less expensive process as it is an administrative probate proceeding processed by a magistrate, and under most circumstances, this process does not require court supervision.

While the informal process is often quicker and cheaper, using an informal probate may have consequences when taking a real estate title out of probate. For instance, under a formal probate, the court makes a determination of the heirs-at-law, but under an informal probate, there is no heir determination in the decree signed by the magistrate. Therefore, informal probate can be problematic when the real estate in question is registered land. When a decedent files for a new title after death, the Land Court will require a formal probate proceeding in order to determine testacy and heirs-at-law.

In the case of recorded land, you will traditionally need an Order of Complete Settlement, to confirm who is the rightful heir, determine title, and eliminate claims for the administration of the estate. This process prevents any further legal claims down the road. To obtain an Order of Complete Settlement you can submit a formal claim to the Probate Court.

Title Trap 2: Deeds of Distribution

In accordance with Massachusetts General Laws (MGL) 190B, §3-907, “If distribution in kind is made, the personal representative shall execute an instrument or deed of distribution assigning, transferring or releasing the assets to the distributee as evidence of the distributee’s title to the property.” However, Massachusetts does not adopt all of the provisions for the deed of distribution under the Uniform Probate Code (UPC). The UPC’s goal is to streamline the probate process and standardize the various state laws governing wills, trusts, and intestacy. A Massachusetts deed of distribution will not deprive other devisees/heirs-at-law of title or bar claims against the estate. Title derived from a Massachusetts deed of distribution remains subject to i) creditor claims under MGL c. 202 § 20 for 1 year from the decedent’s date of death, and ii) payment of expenses or charges of administration for six years from the time of the personal representative’s bond pursuant to MGL c. 202 § 20A.

Clearing title of these liens may be accomplished through either filing a Closing Statement or a petition for Order of Complete Settlement with the Probate Court. Filing a Closing Statement will settle the estate, but is subject to challenge for up to one year after the filing. Title to the property remains subject to claims against the estate during the one-year period and the personal representative is not discharged from his/her fiduciary duty. Filing a petition for Complete Settlement will settle the estate and is not thereafter challengeable except in the case of fraud or manifest error. A petition for Complete Settlement will discharge the personal representative of his/her fiduciary duty and title to real estate will no longer be subject to creditor or administration claims against the estate.

Another issue with Massachusetts deeds of distribution relates to registered land. The Land Court will not accept a deed of distribution from the personal representative to the heirs or devisees under the will without a subsequent petition. In order to establish title in devisees or heirs-at-law, a complaint with copies of the appropriate probate documents will need to be filed with Land Court in Boston. Once accepted and approved by a Land Court, a new order signed by a judge will be issued and then will be recorded with the appropriate registry district in order to establish title in the names of the heirs or devisees.

Title Trap 3: License to Sell

The third title trap when taking title out of probate involves a Probate and Family Court Decree which is more commonly known as license to sell. A license to sell may be obtained by filing a petition in the Probate Court and is used when there is no will or where the will does not contain a sufficient power of sale. One major advantage to obtaining a license to sell is that it conveys good title to the property regardless of debts or claims against the estate. Additionally, under MGL c 215 Section 9A there is also no appeal period for a license to sell. A personal representative can petition for a general license to sell within one year of bond approval and a license to sell for expenses and charges of administration within six years of the bond approval.

When selling real estate through a license to sell, however, it is important to keep in mind that the license is only in force for one year after the granting thereof. Also, the license must contain the correct legal description and the property may not be sold for less than the purchase price listed in the license. Even an insignificant reduction in the purchase price will require amending the license.

Probate with or without a will can be a complex process. A seasoned real estate attorney can help you understand the probate process and protect you and your loved ones from any legal issues that may arise. Reach out to Joseph Hawkins of Ligris + Associates to learn more about title traps.

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