Can executor sell house to heir to pay off mortgage?

Question Details: I am executor for my brother-in-law. I have paid creditors of notice - the ones who filed with probate court. Unsecured creditors (credit cards) have not been paid, but they seem to have given up (over a year since death). His house would net $165,000 if sold by a Realtor. Even though the tax assessment is for $200,000, it was in a terrible state of disrepair and nearly unmarketable. I have put many hours and much sweat into fixing it up on my own. The remaining mortgage is $135,000. Can I sell this house to the heir - his mother - to pay off the mortgage? If yes, at what price? I want to close this estate. One extension has been granted already - but the family would like to keep the house. I guess I can not buy it as I do not want to be accused of "self-dealing."

Asked 11/9/2009 under Wills, Trusts, Probate | 1025 View(s) | More Legal Topics

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Wills, Trusts, Probate Law Answers

Generally executors have broad power to act in the bests interests of the Estate of the Decedent.  With great power comes great responsibility and, here, possiblygreat liability. 

An executor has the obligation to pay off the debt of the estate with the assets.  If you are aware of the credit card debt you have an obligation to address it and not just ignore it.  It depends on the state law how you need to address the debt.  Sometimes a Notice needs to be sent out advising of the Probate and the right to file against the estate.  Some states require publication.  Each state is different.  Most have a time frame for relieving the estate of debt if proper notice has been given and the creditor fails to act in time.

As for the house, which appears to hold equity to deal with other debts.  Without a Court Order, if the Executor acts wrongly, he is open to liability.  If there are other heirs they can sue as well.

I would seek legal counsel with the Probate action to best protect yourself.  If you choose to sell the house for below market value and everything else is the estate has been properly accounted for I would seek Court approval of the sale.  This way you are protected.   

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