Dealing with Real Property Issues During Estate Administration

Transferring real estate can pose a variety of issues during the estate administration following the real property owner’s death. Real property includes the physical property of real estate as well as a bundle of ownership and usage rights. Title for real property must be transferred when the asset is conveyed, and it must be cleared for transfer to take place. A deed is a written document that gives ownership rights to a piece of land. In a deed the grantor gives ownership rights in land to a grantee. Deeds contain important information about the property and the terms of the property transfer. Property in Maryland can be titled in 4 different ways:

These methods of title holding are:

• Joint Tenancy - Joint tenancy occurs when two or more people hold title to real estate jointly, with equal rights to enjoy the property during their lives. If one of the partners dies, their rights of ownership pass to the surviving tenant(s) through a legal relationship known as a right of survivorship.
• Tenancy in Common – This method allows two or more persons to hold title to real estate jointly, with equal or unequal percentages of ownership. The interest percentage simply determines the financial ownership of the real estate. Ownership can be willed to other parties, and in the event of death, ownership will transfer to that owner's designated heirs undivided.
• Tenants by Entirety – This type of ownership in real estate only applies to a married couple under the assumption that the couple is one person for legal purposes. This method conveys ownership to them as one person, with title transferred to the other in entirety if one of them dies.
• Sole Ownership - Sole ownership can be characterized as ownership by an individual or entity legally capable of holding the title such as a business or nonprofit.

Real property in Maryland is recorded and titles can be searched and reviewed through the Maryland courts’ website. Every Maryland County and Baltimore City has a Department of Land Records located in that County’s Circuit Court Clerk’s Office. The Department of Land Records can record any “instrument” (or legal document) that affects someone’s legal interest in real property. Common documents recorded in land records are deeds, mortgages, liens, powers of attorney and certain leases.

Title to real property owned in the sole name of the decedent or the decedent’s interest in property owned as tenants in common generally passes to the beneficiaries named in a will or trust. If there is no will, then the property interests will pass according to Maryland’s law of intestate succession.

One huge caveat though is that if the decedent’s estate cannot satisfy its debts, the real property may be brought into the probate estate by the executor to be liquidated to satisfy those debts. Even if title is held jointly, a portion of the property could be subject to estate debts. The executor may petition the courts to request permission to bring the real property into the probate estate to sell and use the sales proceeds to satisfy valid creditors of the estate.

The executor of an estate is required to pay all debts before distributing any assets to heirs. If the probate court determines that it is in the best interest of the administration of the estate to sell, lease or mortgage any real estate or interest to obtain money for the purpose of settling debts, then those real estate interests will be used in that manner.

For assistance with issues regarding real property considerations in the context of estate administration, contact the knowledgeable probate attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599, emailing us at office@stoufferlegal.com, or register for an upcoming free webinar using the link below:

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