More often than not, real estate transactions can get tricky, especially if you’re inheriting a property where the previous owner has passed away. Whether a property has fallen into your hands or you’re dealing with the death of a loved one, conveying ownership can tack on several months to the real estate process and become a cumbersome experience. Understanding how real estate is conveyed upon death can help new property owners navigate the real estate experience and help them protect a personal asset they are now holding.
What Does Conveyance Mean In Real Estate?
To understand what conveyance in real estate means, let’s begin with its simplest definition. Conveyance is the transfer of ownership of property between the seller/conveyor and the buyer/conveyee. Real estate conveyance is accomplished by using a tool for conveyance, like a lease, contract, or deed. The legal title is transferred to a new owner by executing the document, effectively finalizing the property lien.
Conveyance in real estate is a very important step in any substantial real estate negotiation and is why so many new home buyers will purchase title insurance. Depending on which state you reside in, it may be expected for home buyers to pay a conveyance tax or real estate transfer tax. If you’re buying a home or a property falls into your hands, the conveyance process is the only way to obtain legal verification of the property’s true ownership. Conveyance in real estate clarifies that if one party wishes to break the contract used to transfer ownership, the other party can take legal action to enforce conveyance.
In CT Homes’ helpful guide, we’ll explore what conveyance in real estate is so that future property owners can know what to expect. Here are some scenarios to help determine how a piece of real estate is conveyed upon death.
- Wills/Probate: The most common and straightforward property transfer comes when there is a “will”. Upon someone passing, the will is enforced and the executor (usually a family member or closer relationship) carries out the descendant’s last wishes. If they listed an heir (usually a spouse or family member), then that mentioned individual would take ownership. If there is no will in place or the heir has passed away, the process of “Probate” begins, where the Probate Court in the state where the property is located appoints an administrator, or “executor”. The administrator facilitates the process of collecting assets, paying liabilities, and ultimately distributing any assets to any rightful beneficiaries. Many beneficiaries who receive ownership of real estate via the Probate process do not have the time, interest, or financial resources to own, renovate, or maintain the property. There are costs associated with owning real estate where, in some cases, it may make more sense to sell the inherited property to a cash buyer who can purchase the property in “as-is” condition. That’s where CT Homes can help!! We provide as-is cash offers for those looking to expedite their real estate experience.
- Trusts:A “trust” is another popular estate planning option for those looking to avoid probate and ensure a smooth conveyance in a real estate scenario. Essentially an individual or “grantor” puts ownership of a property into a trust and names a “trustee”. Should the grantor pass away, the trustee facilitates the sale and handling of the property should. There are numerous ways for the property to go into trust as well as numerous types of trusts.
For example, if the property is held in an irrevocable trust, it may not be considered part of the taxable estate, so it will reduce the owner’s tax obligation. Selling a property in a trust requires extra steps, but certainly is not as difficult as it may appear. The person that inherits the property must work with the trustee to sell. The trustee is the one who actually conducts the sale. Upon the sale, the trustee will transfer the title to the seller, who can then transfer it to the new owner.
- Joint Ownership With Right Of Survivorship: The passing of a property owner doesn’t necessarily have to trigger a sale. There are many cases where husband and wife own equal shares in a piece of real estate when they go on the mortgage application and title as joint owners. If one of the individuals passes away, the surviving owner immediately inherits their partner’s percentage of ownership. They now own the property solely and are free to do with it what they please. It is important to note that the will and any trusts may need to be modified, or updated, to reflect the change in ownership.
- Estates: If multiple people own a property and die simultaneously, each share of their ownership would go into their own estate. At this point, each share of the property would follow guidelines set in the individual’s will. That means the individual could designate their own beneficiaries to inherit their portion of the property. This can usually be worked out when a spouse passes away but is much more complicated if the property is owned by working partners or friends. In this event, there is usually plenty of legal red tape and it is not uncommon for a property to sit for months, even years before a settlement is made.
Transfer Property Fast with CT Homes!
Buying, owning, or selling a property after an unexpected death can certainly have its challenges. Within these challenges, there can be many steps to be followed before a descendant can have the legal standing to sell an inherited property. Luckily by understanding what conveyance in real estate means, navigating challenges can be simplified.
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