Clearing Title When Tenant-in-Common Owner Dies

Clearing Title to Real Estate When a Tenant-in-Common Owner Dies

Q:  How is title to real estate cleared when someone dies owning property as tenants in common with other owners?

A:  Through a probate proceeding.

I frequently hear from sellers or real estate brokers when they discover the following closing Requirements on Schedule B-1 of their title commitment:

  1. Certified copy of Letters evidencing appointment of Personal Representative/Fiduciary.
  2. Personal Representative’s Deed to [BUYER] describing the Will, the time and place of probate and the date of Personal Representative’s appointment, and noting the state documentary fee to establish that the transaction was made for value.

What do these Requirements mean and how do we address them?

We see these types of Requirements most frequently because: (1) there were two or more owners of the Property, (2) the owners held title as tenants in common, and (3) one or more of the owners has died. Holding title as tenants in common is contrasted with holding title as joint tenants. Where multiple parties hold title as joint tenants and one owner dies, the deceased owner’s interest automatically passes to the surviving owner(s). But if the vesting deed doesn’t specify that title was held as joint tenants, the default is that the owners own the property as tenants in common.

When property interests are held as tenants in common, a deceased owner’s interest does not pass automatically to other owners upon death. The only way to convey the deceased party’s interest is through a probate proceeding. In a probate administration, a personal representative is appointed by the court, which gives that individual the legal authority to convey the property interest from the estate to the appropriate Buyer or beneficiary.

How does this situation arise? The most frequent cause is because property owners try to “do it themselves” when transferring the property. Perhaps only one spouse purchased the property initially or was the only party on title in order to obtain a loan, but then quit claimed the property to both spouses. Maybe a parent transferred the property to a number of children. Or perhaps the parties even intended to take title as joint tenants but the necessary joint tenancy language wasn’t included in the deed. However the situation arose, it must be addressed when one of the owners dies in order to transfer the property interest to someone else.

The good news is that Colorado probate administrations tend to be much quicker and less expensive than in many other states. Most sellers and brokers are shocked to hear that we can keep closings on schedule by having a personal representative appointed in only a week or so. There’s a common misconception that it will take months for a closing to take place if a probate administration is necessary.

If you run into this type of scenario, or a situation where a single owner held title to property at the time of their death that now needs to be transferred, contact me as soon as you see the probate requirements in the title commitment so we can work to keep your closing on track as scheduled.

 

Mike Smeenk is an attorney in the law firm of Frascona, Joiner, Goodman and Greenstein, P.C., a Colorado law firm. His practice areas includeEstate Planning, Trust and Estate Administration, Real Estate, and Corporations. Contact Mike Smeenk.

Disclaimer — Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.

MICHAEL A. SMEENK