HEIRS: If the descendant (home owner) has passed away less than 1 year from the closing date, there may be some additional things you may need to know about Title requirements and additional costs you may incur. So if your agent hasn't included the extra cost - you will need to remember that there may be additional costs or delays to receive full funds.
If the real property is part of the Decedent’s Estate and less than one year has passed since the decedent’s date of death, there are risks to address before a title insurance company will insure the Buyer and Buyer’s lender.
If the property was conveyed into the Trust by a deed from the Trustor while he/she was alive the requirements below will not apply.
If the property was devised into a Trust via the Will, then it passes through to the Estate and would be subject to the following requirements:
If the owner of the property has died within one year of closing, there are certain risks that are presented when insuring title. The land may be subject to:
- Claims of creditors of the decedent for one year from the date of death,
- A will, a different will or a codicil may be presented to the probate court one year from date of probate or sale to a bona fide purchaser for value,
- Federal estate taxes for ten years from the date of death and/or (d) Virginia estate taxes.
To address possible estate risks, the title insurance company requires that the sellers on behalf of the estate agree to one of the following options:
1. Cash escrow. The sellers must sign Decedent’s Estate Indemnity and Escrow Agreement-Secured and the net sales proceeds must be held until one year from the decedent’s death. Prior to the release of the proceeds to the sellers, title to the land must be examined (and found to be clear). OR
2. Decedent Estate Bond. The sellers may provide, subject to underwriter approval, a surety bond in the amount of the proceeds, from an acceptable surety company. The Bond must be approved by the Company in advance. The costs for such bonds vary widely. OR
3. Collection of Extra-Hazard Risk Premium. The sellers must sign Decedent’s Estate Indemnity and Escrow Agreement-Unsecured, provide a letter that there are no federal estate taxes due from the estate and pay an extra-hazardous risk premium directly to the title insurance company of $2.00 per thousand (based on the sales price OR the net sales price of the real property to be insured with a minimum premium payment of $250.00)
So for a $500K home sale net expected - you may need to allocate additional $1,000 in settlement costs.
If you have any questions, please call Tim or Ayda. We work with heirs that may be living in different parts of the nation/world. We utilize secured platform and can record meetings, discussions if other heirs can't attend. Bring all the heirs, attorneys etc together online to ensure the communications are open and communicated. So give us a call. We are here to help.
