Selling an Estate Property in New Jersey

When you inherit a home, knowing what to do with the property can be complex and overwhelming. You are likely dealing with the arduous task of making a ton of quick decisions, filling out seemingly endless paperwork, all while potentially feeling the grief of losing a loved one. Whether you are the executor of an estate, inheriting alongside siblings, or the new sole owner of a property, determining next steps can be challenging.

Veitnegruber Law is an experienced real estate and estate planning attorney in New Jersey. We have a keen understanding of the legal and financial complexities of real estate transactions and the inheritance process, and how these two areas can overlap. Here is our guide on selling an inherited home in NJ.

A Note on Probate

Whether a property needs to go through the probate process depends largely on the type of ownership it has. For example, properties held in a trust or co-owned property will typically avoid probate. On the other hand, a home owned solely by the decedent, estates without a will, and situations in which creditors must be notified of an ownership transfer will require probate.

1.  Establish Authority

The first thing you need to do is determine if the property can be legally listed or sold. The executor of the estate must be officially appointed by the local courts, with authority to proceed to a sale if desired. If the decedent left an estate plan or will, the named executor will file the will and death certificate with the Surrogate’s Court in the county in which the property is located. The Surrogate’s Office will then give the executor “letters of testamentary.” This legal document grants the executor legal authority to manage and settle the estate, including selling the property.

If there is no will in place, the individual(s) who wish to serve as executor (s) may petition the court for appointment. If approved, the court will grant the chosen individual “letters of administration,” which work similarly to letters of testamentary but give an individual authority to manage an estate despite not being named in a will.

Once authority is established, it is critical to secure the property promptly. Because the executor is responsible for the property's well-being, it is important to change the locks to limit access. The executor will also need to ensure regular upkeep. If the property is occupied, you will need to discuss your plans to sell with the occupants as soon as possible. Acquiring a legal Notice to Quit may be necessary if the occupants refuse to move.

2.  Financial Issues and Tax Waivers

To successfully close on a home, there are specific tax hurdles that must be cleared. Under NJ law, creditors must be notified that an estate is in probate. Creditors then have nine months to file claims against the estate. The executor must also settle debts, taxes, or other financial aspects tied to the property being sold.

Executors are also responsible for paying or settling inheritance taxes. They can obtain a real property tax waiver from the NJ Division of Taxation. This will clear any tax liens on the property, allowing it to be sold free and clear of financial entanglements. If a tax waiver cannot be secured for any reason, the buyer's title company may make the sale conditional on the estate providing compensation for tax liens.

3.  List and Market the Property

As soon as the executor receives the Letters of Testamentary or Administration, the home can be listed for sale. You do not need to wait for the entire probate process to conclude to begin selling the home. Closing, however, is contingent on final probate clearance. In NJ, the probate process typically takes 6 to 12 months, while home sales normally take 30 to 90 days.

Many executors choose to list properties “as-is,” meaning the estate will not make any repairs or renovations to improve the property's condition. This absolves the estate from having to make any repairs or from using limited estate funds to do so. Make sure the as-is condition is clearly stated when listing the property. You also need to ensure that you disclose any known defects in the property as required by law.

4.  Closing

Once the property closes and the sale has officially occurred, the sale proceeds will be deposited into the estate’s bank account. From these funds, the executor can pay off any remaining estate debts and cover administrative costs. Any remaining funds will be distributed to the estate's beneficiaries.

If you are going through the process of selling an inherited home in NJ, a real estate attorney is a crucial partner who can help you navigate the sale and ensure all legal requirements are met. Working with an experienced team of legal, real estate, and tax experts can ensure that the sale proceeds smoothly and that you, as the executor, act in the estate's best interests. When you need a real estate and estate planning lawyer in NJ, Veitengruber Law is uniquely qualified to assist in this process.