{Read in 4 Minutes} As a Trust and Estates attorney, I have represented hundreds of different Executors and Administrators in the Surrogate’s Court. Any Executor or Administrator will receive Letters from the Surrogate’s Court upon the completion of their initial proceeding; these Letters provide the legal authority for the Executor or Administrator to carry out their duties as the fiduciary of the Estate.
In some situations, the Surrogate’s Court may put restrictions on Letters. These might prevent the sale of certain items, the ability to make a distribution to the beneficiaries, or potentially even requiring a judicial accounting. In my experience, in probate proceedings, restrictions on Letters are rare. However, in administration proceedings, it is incredibly common for the Surrogate’s Court to prevent the Administrator from selling real property absent further approval of the Courts.
Let’s say that you are the Administrator of an Estate that owns real property that you wish to sell. Generally, under New York State Law, it is not always necessary for the Administrator to sell real property. Why? Because title vests automatically in the surviving next-of-kin. However, sometimes selling the property within the Estate is necessary or preferred. For example:
1. The beneficiaries may want the Administrator to sell it because they would prefer to receive cash as opposed to a fractional interest in real estate.
2. The debts of the Estate may exceed the liquid funds available, so selling the property is the only way to pay the creditors.
3. The next-of-kin may want the Court to ratify a proposed sale to an investor to hedge against predatory deed fraud sometimes involved in such transactions.
For whatever reason, if the Administrator wishes to seek permission to sell the real property, they need to file a Petition with the Miscellaneous Department of the Surrogate’s Court that issued their Letters of Administration.
What’s involved in such a Petition? Well, it’s important to list the address of the property and it’s approximate value. Many Courts will require both an appraisal from a licensed appraiser and an estate tax waiver from the New York State Department of Finance. Additionally, the Administrator will need to list the names and addresses of all of the people interested in the Estate and advise the Court whether any of them are under a legal disability. If there are any under a legal disability, the Court may need to appoint a Guardian Ad Litem for them.
The Court will then review the petition and issue a Citation to those interested parties directing them to appear in person at the Courthouse — or perhaps virtually — to voice any concern they have. Anyone strongly opposed to it may even go so far as to file Objections. The Court will then make a decision, and if that decision is to allow the sale of the property, the Court will remove the restrictions on the Letters of Administration. The Order allowing the property sale may also direct the Administrator to distribute funds to the next-of-kin directly at the closing table, receive the assets into the Estate, or perhaps to adjust or require an Administrator’s bond.
While any Administrator can decide to use or not use an attorney for this proceeding, it may be advisable to have one here, particularly if that attorney is also handling the underlying real estate transaction. Regardless of whether the Administrator has legal counsel, it is important for the Administrator to communicate to the potential purchaser that Court approval will be necessary so that all of the parties involved will have a realistic timeline. Although I would describe the Surrogate’s Court as a Court that moves very expeditiously, it’s still a Court proceeding, which means that there will be a longer turnaround than the purchaser may otherwise anticipate.
For more information on this topic, please contact me.