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Can The Executor Sell Property Without All Of The Beneficiaries Approving?

Can The Executor Sell Property Without All Of The Beneficiaries Approving

First and foremost, the named executor in the decedent’s will has no power to sell any real estate or property belonging to the estate until he or she has been officially appointed by the Surrogate’s Court. How do you know if they have been officially appointed? Check with the Surrogate’s Court to see if letters testamentary or letters of administration (no will) have issued.

Just because an executor is named in the last will and testament, it does not mean such title is automatically vested with that person. Without the court’s seal of approval, not one person has the power to act on behalf of the estate. To be considered for the job, a probate petition along with the original will must be filed with the court. Notice must then be given to all heirs at law (not necessarily the beneficiaries) to determine whether they have any objections to the offered will or to the fiduciary’s appointment.

Upon the official appointment, the power of the representative will depend on the terms of the decedent’s last will and testament, or in cases where the decedent died without a will – the New York intestacy statute.

Powers of the Administrator (in cases of no will)

When someone dies without a will in New York, an administrator, rather than an executor, must be appointed. The roles and duties of both are very similar in that the fiduciary’s task is to manage and distribute the estate assets to the rightful heirs or beneficiaries. However, where the executor must follow the wishes of the decedent set out in the will, the administrator must simply distribute estate assets to the heirs, which commonly involves turning non-liquid assets to cash. The fiduciary begins the process by liquidating the decedent’s stocks and bonds, emptying out bank accounts, selling any tangible items of value, and most importantly, selling real estate owned by the decedent during his or her life. All cash realized from the liquidation is deposited into an estate bank account. After satisfying creditor claims, legal fees, and other administration expenses, the remaining balance is distributed to the heirs-at-law, in equal shares.

So, does the administrator have the power to sell real estate without everyone’s consent? Yes, unless you have a compelling reason why she cannot. Unlike probate, where the last will and testament, as the controlling document, dictates what the executor can or cannot do, there is no will to refer to in an administration proceeding. There is no will for the Surrogate’s Court to reference, for example, showing that the decedent prohibited the sale of his home or intended a life estate for his elderly mother. Absent such language in a will prohibiting or delaying a sale, the property is sold by the administrator.

Stopping a Sale

Stopping an administrator from selling a property is a very challenging task. Unless a will is found that reads the property goes to a specific beneficiary or cannot be sold, the odds of stopping the sale are not in your favor. There may the option, however, to buy out the interests of the other heirs in the property. For example, Jack died leaving a house worth $500,000.00. Jack died without a will. He is survived by five children. To prevent the sale of his childhood home, Alex, offers to buy out his siblings by giving them $100,000 each. The four siblings all agree and ownership of the home is transferred to Alex. Most heirs are inclined to agree to a buy out since they can save money on seller transfer taxes, real estate broker fees, and other expenses associated with selling a home.

The other alternative is to have an agreement with the other heirs to not sell the property. However, since most people want to receive their inheritance sooner than later, reaching a consensus not to sell or delay the sale is a long shot.

Selling Below Fair Market Value

Where the administrator is selling a property significantly below market value, the sale is likely to be halted. A fiduciary that enters into contract to sell to a family friend or to herself for less than market value constitutes a breach of fiduciary duty. Courts look for arms length transactions to ensure that parties receive a fair share of their inheritance. In a recent court decision, the executor sold an estate brownstone to her friend for approximately $600,000.00. Similar homes in the area were selling for over 1.3 million at the time. Shorty after the sale, the friend resold the brownstone for 1.3 million. The beneficiaries objected to the transaction and the court ordered the executor to return the loss back to the estate.  Call a probate lawyer instantly if an executor is engaging in fraud or self-interest.

Avoiding Foreclosure

Where the deceased or the executor fails to pay the monthly mortgage payments or maintenance charges (in co-ops) and a foreclosure action is filed, the parties may still have a chance to save the property from selling at a public auction. With foreclosure sales, the bank or the co-op board sets a reserve, a.k.a the minimum the price, the home can be sold for. The entity’s only concern is that their balance is guaranteed. They could care less if the sale results in any gain for the beneficiaries. Many times, the public sale procures just enough money to cover the mortgage balance and leaves nothing for the heirs.

In most instances, the property can be saved, even in the eleventh hour, by filing a motion called an Order to Show Cause to stop the sale. The statute is very specific as to when a judge can grant relief from foreclosure, so do not attempt this on your own. An estate lawyer handling the probate proceeding is typically equipped to file such an action. If the court allows the executor to sell the property on the market in lieu of the public sale, the home can be sold for fair market value and any equity can be split among the beneficiaries. Contact an estate lawyer immediately if a property of the estate is in foreclosure.

The Executor’s Power to Sell Property (decedent died with a will)

In a probate case, whether or not the the executor has the power to sell a piece of property depends on the language of the will. Does the last will and testament of the decedent leave the property to a specific beneficiary “I leave my brownstone to Alex”, or does the will leave a property to more than one beneficiary “I leave my brownstone to my three children, who are living at the time of my death.” In the first instance, the executor simply transfers the title to the brownstone to Alex and he does as he pleases with the property after he assumes ownership. For the latter, unless the beneficiaries agree not to sell, the executor has the power to sell the property and distribute the balance amongst the three children.

In short, if the will does not disallow a sale, the executor can sell a property without the beneficiaries consenting. If the will is silent on the topic, or gives the executor absolute discretion to do as he or she sees fit with the property, we can assume the executor has the authority to sell. As in an administration proceeding, your reason for stopping a sale must be compelling in a probate proceeding. Does the will provide you with a life estate? Is the executor engaging in fraud? Trying to stop the sale because you live on the property and want to continue doing so (rent free or as a paying tenant) is not compelling. Contact an estate lawyer immediately if you feel have standing to stop a sale.

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Communicating and coming to terms with an executor can be a significant challenge to many beneficiaries. The fiduciary’s power in a specific fact pattern depends on the terms of the decedent’s last will and testament or the intestacy rules (no will). One thing that is for certain, the named executor in a will, or an individual who has filed an application to be appointed as administrator of an estate, has no power to act until the court grants such authority by issuing letters testamentary (will) or letter of administration (no will) to the individual. Even then, the letters may restrict the fiduciary to sell any property until they seek specific court permission to do so. If you are fiduciary of an estate, or having difficulties with a fiduciary, contact Mishiyeva Law, PLLC, at 646-233-0826. To avoid a multitude of problems, talk to a New York probate lawyer before it becomes too late.

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