Does a Beneficiary Need to Change the Title of a House Before Selling?

By Terry White

The legal transfer of real estate doesn’t happen magically in life, but strangely, it can in death. In some states, real estate vests in a beneficiary named in a will at the time of the property owner’s death There’s no legal reason to change the title. But if you want, or if your state requires, changing the title is usually a simple procedure accomplished in probate.

The legal transfer of real estate doesn’t happen magically in life, but strangely, it can in death. In some states, real estate vests in a beneficiary named in a will at the time of the property owner’s death There’s no legal reason to change the title. But if you want, or if your state requires, changing the title is usually a simple procedure accomplished in probate.

Purpose of Probate

Probate is the court process that transfers the assets of a deceased person to beneficiaries. Beneficiaries are designated in a will or, if there is no will, the decedent's heirs are determined by state law. Probate is the legal vehicle used to transfer a real estate title from one owner to the next. If you inherit property, a deceased owner cannot deed the property to you. Instead, the probate judge enters an order that declares you the new owner and titleholder.

Protect your loved ones by a legally binding will. Make a Will Online Now

Changing Title in Probate

Transferring a real estate title is one of the most common reasons for probate. An executor has the power to sign a deed conveying the property from the estate to the beneficiary. The transfer is accomplished through what’s known as an executor’s deed. Without this legal step, title to the property may be “clouded.” Most title insurance companies will not guarantee a clear title until title transfer has been made in probate. Formally transferring the property to the new owner and filing the deed at the courthouse keeps title to the property clear.

Selling the House in Probate

A beneficiary may choose to sell an inherited house and take the cash instead. It’s not necessary to transfer title to the beneficiary because the beneficiary is not buying the house. Rather, the estate is selling the house to a third party who would obtain title. If the estate is heavily indebted, it may be necessary for the executor to sell the property to satisfy creditors. In this case, the beneficiary would receive any leftover funds not needed to cover the estate’s debts.

Probating Mortgaged Property

Many times, a beneficiary discovers an inherited house comes with a catch – a mortgage. Under federal law, the mortgage company cannot “call” the mortgage -- that is, require the mortgage to be paid in full -- on a home inherited from a parent or certain other relatives. However, you can assume the mortgage only if you plan to live in the house. If you want to rent out the house, the bank will likely require you to refinance.

Beneficiary Deeds

A property owner can transfer title to a house to a beneficiary during life using a beneficiary’s deed instead of a will. The property owner signs a beneficiary’s deed, which transfers title to the beneficiary, but not until the property owner dies. It’s an easy way to keep property out of the probate process. A beneficiary deed may be revoked at any time by the owner. If an owner makes more than one beneficiary deed for the same property, the last recorded beneficiary deed controls.

Protect your loved ones by a legally binding will. Make a Will Online Now
How to Add a Beneficiary to a Mortgage Deed

References

Related articles

How to Get Heirship Over a Decedent's Estate

Not everyone makes a will directing the passing of their property after their death. If one doesn’t exist and the deceased owned real property, an Affidavit of Heirship is worth a look. This legal device can establish the deceased's rightful heirs and save a great deal of time and complexity in the probate process. In some cases, it will help you avoid probate altogether. Obtaining heirship over an estate is usually a simple process.

Who Is Entitled to a Vehicle After a Person Dies If It Is Not Included in a Will or Trust?

A vehicle not included in a will or trust instrument is passed down according to a state's rules of intestacy or as a non-probate asset. "Intestacy" means the owner died without spelling out in writing, typically through a will, who gets the vehicle, so a court must decide the question of inheritance. A non-probate asset passes to a new owner by action of law, outside the workings of the probate court overseeing the estate. Either way, the new owner must register the vehicle's title.

What Is the Difference Between Warranty Deed & Trustee Deed?

A deed is the formal document used to transfer ownership of real estate from one person to another. Different types of deeds accomplish that objective in different ways, and are used in different types of real estate transactions. Warranty deeds are among the most common types of deeds used to convey land ownership, while trustee deeds are most often used in place of a mortgage deed in California and other states that allow nonjudicial foreclosures.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

What Happens If I Inherit Property With a Mortgage?

Inheriting a home can become a troublesome financial burden, especially if the home comes with a mortgage. Under ...

Is Probate Required for a Home Transfer After a Will Was Written?

Probate involves the legal process of transferring the title to property from the deceased’s name into the name ...

Inheriting Property in a Will in Missouri

A Missouri resident can write a will leaving his property -- real estate or personal property -- to named beneficiaries ...

Quit Claim & Divorce Laws in Michigan

Michigan couples, like couples around the country, must split their marital property when they divorce, including the ...

Browse by category