Estate Contracts Bear Close Examination

The sale of estate property could have devastating results for Realtors and their clients if documents are not properly executed. Many times I will get a contract that deals with an estate signed by "Jane Doe as executrix of the estate of John Doe." 

At first glance, this appears correct. However, a quick review of North Carolina law regarding real property of a decedent reveals who has the authority to sign the Listing Agreement and Offer to Purchase. 

So, who has authority?  The executor/administrator?  The heirs?  Both? 

The answer may not be as simple as it first seems. 

In North Carolina, real property does not automatically belong to the estate, able to be sold at the whim of an executor or administrator.  North Carolina General Statute § 28A 15 2 (b) states that:

Real Property—The title to real property of a decedent is vested in his heirs as of the time of his death; but the title to real property of a decedent devised under a valid probated will becomes vested in the devisees and shall relate back to the decedent’s death, subject to the provisions of G.S. 31 39. (1973, c. 1329, s. 3).

What this means to you is that the heirs must be a party to the Listing Agreement and Purchase Agreement in order to have valid agreements.  Without having the heirs sign the agreement, any heir can come in at any time and kill the deal.

Of course with any law, there are always exceptions. However, the exceptions listed below are rare:

  1. There is a properly probated Will that leaves the property to the executor directing him to sell the property or gives the executor the power to sell the real property. Courts disfavor these provisions and they must be explicitly stated in the Will to be given effect. 
  1. Court Ordered Sale: In the absence of a Will or a provision in the Will allowing the executor to sell the property, a court may order the sale allowing the executor or administrator to sell the property without the joinder of the heirs. 

When dealing with estates and estate contracts, the best practice is to have all parties sign all agreements. The heirs will need to sign because, more than likely, they will hold title to the property subject to the debts of the estate. The executor/administrator will need to sign because they will be affirming that all debts of the estate have been paid or that there are sufficient assets in the estate to pay all debts.

Published by J. Chris Huff on December 4, 2015