Q: How much of house sale must go into escrow in a probate case with restrictions in Letter of Admin
Brother Mac died intestate in Miami, FL in Nov 2016. After 16 long months, I have finally been named PR. Mac had no liquid assets, just 25% ownership of a house in Ocala, FL (not his homestead) and a car. My other two brothers and I are the other owners of the Ocala house, and we are also the heirs to Mac's estate. We want to sell the house. Letters of Admin has numerous restrictions, including: "The PR shall place all liquid assets in a depository designated by the Court ... This is a frozen account, No funds can be withdrawn without a court order" -- and -- " If Florida real estate is sold, per court order, a closing statement shall be filed, and the sale's net proceeds shall be placed in the Depository." Our probate attorney states that if house is sold in order pay Mac's creditor debt, ALL of the proceeds must go into the Depository. Shouldn't just Mac's 25% share of the proceeds have to go into depository?
A: I disagree with your attorney and Mr. Kaufman. Only 25% of the net proceeds are part of the probate estate. In my opinion, the Miami-Dade Letters of Administration and Order Appointing PR should be interpreted to apply only to the 25% of the net proceeds of sale, because the estate only has a 25% interest.
There is another issue, however, that needs to be addressed, and when the order I am referring to in this paragraph is signed, it will answer the question that you raise. The PR is going to need to file a petition for an order authorizing sale of real property and will need to attach a certified real estate appraisal and a copy of the buy/sell agreement to the petition. Most jurisdictions have a published checklist what information needs to be included in this petition and what needs to be attached.
This petition and order is necessary because the estate is intestate, and there is no will giving the PR powers to sell. The order authorizing sale needs to be signed by the judge before the closing and a copy of the order provided to the closing agent, so the closing agent (and the title insurer) can see that the PR is authorized to sell the 25% interest. The order authorizing sale should be drafted by the attorney for the estate for the court's review and judge's signature, and the language should state that only the 25% of the net proceeds of sale shall be deposited into the restricted depository.
If you or your attorney ever need clarity on any issue, your attorney can file a motion with the court requesting an order directing PR to take some certain action. In this situation, however, the answer will be in the order authorizing sale. The probate estate only includes a one-fourth interest in this property, and only a one-fourth of the net proceeds of sale goes to the estate. The closing agent will issue four checks, one for each seller, the estate being one of the four sellers. This will not happen, however, until the court has signed an order authorizing sale.
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