Notes from the Attorneys of the Massachusetts Association of REALTORS Legal Hotline
Q. What should I do before handling estate properties?
A. Listing estate properties for sale can present a multitude of challenges for REALTORS® and lead to many questions regarding how to handle the listing process. REALTORS® are encouraged to solicit as much information about the listing to ensure a successful sale. The sale of estate properties is governed by Massachusetts probate law. If a person dies without a will the probate court will appoint an administrator to probate the estate. The administrator will need to request the authority to sell the real estate. This authority is known as a license to sell and will stipulate a minimum price at which the real estate may be sold. Once this is granted, the license is usually valid for one year and the administrator has the right to sell the property at the price stipulated. (Property bequeathed through a will is to be handled by the executor who will normally ask the probate court for a license to sell.) REALTORS® should be sure to inquire as to whether the administrator has acquired a license to sell, as well as the amount of the minimum price. Unfortunately, a license to sell does not always ensure a smooth transaction. An administrator has the right to accept an offer at or above the minimum price. Many administrators, however, will draft the contract to purchase with a condition that they may return to the probate court to amend the license to set a higher upset price, even after accepting a lower offer.
Q. I have an Exclusive Right to sell listing agreement on an estate sale. Do I need to have the listing agreement signed by one beneficiary, all the beneficiaries (where there is more than one), or only the administrator/executor.
A. The beneficiaries do not need to sign. The listing agreement may be entered into by the executor. Technically the statute of frauds does not apply to contracts for brokerage services, but only to the conveyance of an interest in real property. Nevertheless, it is recommended that the broker obtain a listing that is signed by the executor.
If an executor (under a will) has been granted a power to sell real estate, the executor may do so with a Probate Court license. If the testator dies without a will an administrator will be appointed. For an administrator or if there is no power of sale granted in the will, the Probate Court will need to approve any sale by granting a license to sell. If a license to sell is required, the executor/administrator should not accept an offer unless it is contingent upon obtaining the license. In such a situation, the recommended procedure is for the seller’s attorney (not the broker) to draft a counter-offer that makes the estate’s obligation to sell contingent upon obtaining the license. At a hearing for Court approval of a sale, beneficiaries or others will have the opportunity to raise any objections to the sale or the price.
As probate sales can be complicated, REALTORS® are encouraged to refer all contracts to the attorney for the estate. REALTORS® representing buyers of such property should advise their clients to seek legal counsel before signing contracts to purchase. For additional questions on listing properties, authorized members may contact the MAR Legal Hotline, weekdays, from 9 a.m. to 1 p.m., at 800-370-5342.