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Can an heir from the estate sue if the executor sells the house?

On Behalf of | Apr 23, 2021 | Estate Administration & Probate |

Many Americans spend their entire working lives paying off the principal balance of their mortgage and accruing equity in their homes. When people die, they frequently leave the home where they lived to their children or other heirs.

If no one intends to live in the home, the executor of the estate will likely sell the property. Sometimes, the decision to sell real estate holdings from an estate can lead to challenges from beneficiaries or family members of the deceased.

What are some of the more common reasons that an executor’s listing of a property might lead to legal challenges?

When they fail to offer a family member the first right of refusal

The house where a family lived can have sentimental value. Those planning their estates will often consider the desire of one or more family members to keep the property rather than just benefit from its value. They may include a clause extending the first right of refusal for the home to one or more of the beneficiaries of their estate.

If a last will includes this kind of language, certain individuals have the right before anyone else to make a fair market offer for the purchase of the property. If the executor does not allow family members to make an offer before listing it or selling it to someone else, those family members could take action against the executor for violating their rights.

When an executor undervalues the property

Generally, executors should seek at least the fair market value for a property, if not the highest value they can receive for it. When the real estate market is competitive, an executor may need to secure a professional appraisal and consider multiple offers to get the best value for the property.

Some may try to personally profit off of the sale by making an offer below market value themselves or selling it to someone they know for less than they would receive if they listed the property openly. In situations where an executor either breaches their fiduciary duty by putting their own financial gain first or fails to get a fair price for one of the most major assets in an estate, the beneficiaries of the estate could challenge the executor or the sale of the property.

Executors and beneficiaries should familiarize themselves with the rules that govern the sale of real estate as part of estate administration to minimize the risk of probate litigation.