When Is A Land Sale Required?
Part I of this series titled How To Sell Real Estate In Ohio Probate Court explained that the only ways to sell real estate in an Ohio probate estate are:
- Under a power of sale granted in the decedent’s will,
- With the consent of the surviving spouse, all beneficiaries of the will and/or all heirs at law, or
- Pursuant to an Ohio land sale proceeding
This means that if all the beneficiaries or heirs will not give the estate fiduciary consent to sell the property (or if one of them is a minor), a land sale proceeding will be required regardless of whether the estate fiduciary or other beneficiaries would like to avoid this expensive court procedure.
Selling Real Estate To Pay Decedent’s Debts
A land sale can be (and often is) used if the real estate must be sold to pay the decedent’s debts. Sometimes a land sale is sought even though the real estate does not need to be sold to pay debts, but in that case 25% of the people who hold the interest in the real estate can stop the sale by filing a written objection with the court.
What Is “A Land Sale”
A land sale is similar to a lawsuit or foreclosure action. It is a civil litigation proceeding and it is complicated. The rules are contained in Chapter 2127 of the Ohio Revised Code, entitled “Sale of Lands.”
The estate fiduciary begins the land sale by filing a complaint in the probate court, naming all beneficiaries/heirs, as well as all lienholders as defendants. The defendants will have 28 days to file their answer to the land sale complaint with the probate court. After that period ends, the fiduciary may request an order to sell the real property at public or private sale.
- A private sale is what most people are familiar with. The estate fiduciary would list the property for sale to members of the public with the help of a Realtor and must sell the real estate for at least the appraised value of the property.
- A public sale is done at auction by the county sheriff or by a private auctioneer. A public sale requires that the property be sold for at least 2/3 the appraised value of the property.
After the estate fiduciary receives an offer to purchase the property, they must file a report of sale with the court and request approval of the distribution of the sale proceeds to the lienholders. Often, the court will be approving distribution to the mortgage holder, county treasurer for taxes, condo association, and to pay attorney fees, for example. Any remaining proceeds are transferred to the probate estate to pay other debts. If the estate is not insolvent after paying these other debts, the remainder will be paid to the beneficiaries or heirs.
Avoid Foreclosure By Filing A Land Sale In Probate Court
A great reason to create a will or trust during your life is to make sure your loved ones do not have to go through this expensive and time-consuming land sale proceeding. However, sometimes a land sale is necessary. For example, even if the estate fiduciary has a power to sell the real estate through the will, it may be a good idea to file an Ohio land sale proceeding to prevent the mortgage company from beginning a foreclosure action. One the land sale is properly filed, the estate fiduciary or beneficiaries will not need to personally pay mortgage payments during the pendency of the land sale if there is not enough money in the estate to make those payments each month. This allows the fiduciary to have the time to obtain the best price on the real estate market without worrying about losing the property to foreclosure.
Do you need help conducting a probate land sale proceeding to sell a home, condo, farmland, vacant land, or other real estate? Golowin Legal can help. Call us today at (614) 453-5208 to schedule a meeting or Zoom conference. Visit the Golowin Legal probate page for more information.