When someone dies owning an interest in real estate, the legal instrument used to convey the property is a Personal Representative’s Deed. In the deed, the Personal Representative (“PR”) of the estate transfers the deceased owner’s interest to either a third-party buyer or an estate beneficiary.
Does a Personal Representative’s Deed Require a Probate Administration?
Yes. In order for someone to have the legal authority to transfer title to real estate that was owned by a party who died, there must be a probate administration. When a probate administration is opened, a Personal Representative is appointed by a court to administer the estate. Even if the decedent had a will that nominated a PR, a probate administration must be opened so the PR nominated in the will is formally authorized by the court.
The document issued by the court that demonstrates the PR’s appointment is the Letters Testamentary (if the decedent died with a will) or Letters of Administration (if there was no will). The Letters show that the person who signs the deed on behalf of the estate has the legal authority to do so. The Letters must be recorded before any deed from an estate will be recognized as valid.
Is a Personal Representative’s Deed always necessary when someone dies owning real estate?
No. A PR’s Deed is only necessary if someone died owning an interest in real estate that did not pass some other way upon death.
For instance, if someone dies owning real estate as joint tenants with other owners, their interest automatically passes to the surviving joint tenant owners upon death. Similarly, if someone dies owning real estate with a beneficiary deed in place, the owner’s interest passes by law to the designated beneficiary.
Who Prepares Personal Representative’s Deeds?
When a Colorado property is sold from an estate to a third party buyer, a title company is typically used to close the sale. The vast majority of title companies in Colorado will not prepare Personal Representative’s deeds and instead require that the deed be prepared by a licensed Colorado attorney. Our law firm regularly prepares PR deeds for estates, whether or not we represent the PR during the course of the full estate administration. However, some title companies will allow the PR to prepare their own deed. The best practice is to check with the title company handling closing as to their specific closing requirements as early as possible.
PR deeds of distribution to estate beneficiaries where no title company is involved do not necessarily require attorney involvement. However . . .
A word of caution about distributions to estate beneficiaries via Personal Representative’s Deed.
Unless the applicable statutes of limitations have run, a court order must be obtained that supports and confirms the deed of distribution in order to vest full and merchantable title in the hands of an estate beneficiary.[1] A court order is necessary due to the possibility that other parties may have claims against the estate that proceeds from the sale of the property are necessary to satisfy. In other words, a Personal Representative may not distribute estate assets in order to frustrate creditors or other claimants and say that there are no remaining resources in the estate to satisfy the claim. The applicable statute of limitations where no court order would be necessary is the later of: (i) one year after the date of the deed to the beneficiary, or (ii) three years after the date of the decedent’s death.[2]
If a PR is planning to distribute real estate held by an estate to a beneficiary who intends to sell the property relatively quickly, the PR should obtain a court order approving the distribution. Otherwise, the title company handling closing will not insure title when the beneficiary attempts to sell to the end buyer. Our firm assists PRs with obtaining these types of court orders.
Please contact me if you need assistance with preparing a Personal Representative’s Deed or any other component of a probate estate administration.
[1] Colorado Real Estate Title Standard 11.1.7(A)
[2] C.R.S. § 15-12-1006(1)(b)
