What if my siblings (co-inheritors) are out-of-state?

You might be the sole beneficiary, or maybe you inherited a house together with your siblings. Whatever the case may be, we know how to go about protecting you as the seller in the most advantageous way. We are also well versed in powers of attorney, which are useful tools to use when there are several beneficiaries, many who live out of state. Instead of attempting to gather multiple signatures on every document, we can employ powers of attorney to expedite the selling process.

What about capital gains?

We also help you establish what your new basis in the property is. This is vital to saving money on capital gains taxes when you sell because you will not have the option of utilizing the standard homeowner deduction of the first $250,000 in capital gains being tax-free, unless you reside in the property for at least 2 of the next 5 years after you inherit it. ALERT: there is also a rule in Colorado regarding out-of-state sellers and amounts that need to be withheld from the sale proceeds in a transaction. If you are not a Colorado resident, and you are due to inherit real estate, please contact us as soon as possible to determine the best way for you to minimize the headaches of selling property in Colorado by an out of state individual. 

What if there is no will?

Selling an inherited property when the decedent owner did not leave a will or trust (intestate sales). Dying without a will in Colorado is called dying intestate. When someone dies intestate in Colorado owning real estate, a probate must be opened. This is true regardless of the value of the decedent’s estate when he/she died. Colorado allows for the collection of personal property using an affidavit for small estates (under $70,000 in value). However, this expedited procedure is not available for estates that have real estate. 

To begin, someone will need to be the Personal Representative of the estate. This is the individual who steps into the shoes of the decedent and settles his final affairs for him. This individual has all the powers the decedent had to transfer property, subject to the probate and intestate succession laws in Colorado. Documents will need to be filed with the district or probate court in the county where the decedent resided at the time of death, even if that is not the county where the real estate is located. For example, if the decedent died residing in Jefferson County, but owned a cabin in Grand County, the probate would still be filed in Jefferson County. Once you have filed the appropriate paperwork with the Court and the court is satisfied that all appropriate people have been notified and provided an opportunity to be heard, you will be entitled to receive Letters of Administration. These Letters are the evidence of your authority to act on behalf of the estate. You will need at least one original copy of the Letters to properly record with the county where the property in situated. You will need to provide notice to any creditors of the decedent that he has passed and that they need to file a claim with the court (or with you) in order to properly be entitled to collect on the claim. You will need to wait until the creditor notice period has expired before you can distribute the property, or the proceeds therefrom, to beneficiaries. This does not mean that you can’t sell the property during probate administration while the creditor claim period is still open. You are allowed to sell property of the estate during this period because you are effectively simply exchanging one form of asset for another form. You are trading an estate asset valued at the value of the house for cash in the same amount. This doesn’t mean that you can distribute the funds – it just means that you can begin to engage in the listing and selling process while the probate is open.  We can guide you through this process.

What if there is a will?

When a decedent dies with a will in place, there are matters involved with probating the decedent’s estate, establishing the authority of someone to act on behalf of the decedent’s estate (called a “Personal Representative” in Colorado), and utilizing the correct form of deed to make the conveyance to the purchaser. Something important to remember about dealing with a probate estate is that mistakes can often be costly because of the time required to remedy a previous mistake or omission in the probate case. It is not uncommon for the court to require notice to provided to all creditors and potential beneficiaries (collectively referred to as “Interested Parties under the Colorado Probate Code.) before the court will grant a motion to correct a previous mistake. This can kill a closing. Don’t allow this to happen to your transaction. Allow us to work with you from the beginning to make sure everything is completed correctly and in a timely manner so that your closing is air tight. 

What if there is a trust?

You may be in a position to inherit real estate through either a testamentary trust or an inter vivos trust. We can help you navigate either situation. Receiving property through a trust is not as simple as it sounds. The process needs to properly comply with established Colorado Title Standards so that you can thereafter selling the property yourself or through your own trust. Colorado requires certain documentation to be recorded to establish the trustee’s authority to act on behalf of the trust and the real estate contained in the trust.

We know exactly what needs to be done to facilitate a sale through a trust. We are well versed in all matters pertaining to trusts in Colorado.

Steps: You need to publicly show your authority to act on behalf of the trust that owns the property. This is done by recording a Statement of Authority pursuant to C.R.S. – with the Clerk and Recorder of the county where the property is located. This is recorded to allow people who are later in the chain of title for the property to identify that you possessed the legal authority to convey the property. After the statement of Authority is recorded, the trust can convey property from the trust via any of the commonly used deed types in Colorado. Be careful here:  Property is often conveyed to a trust using something less than a general warranty deed. If this is your scenario, you should be careful of conveying the property via a different type of deed that requires more representations and warranties than the deed used to move the property into the trust. 

What are the first steps Flatirons Real Estate Group will take?

1. Determine who the seller will be.

2. Obtain the necessary documents needed to properly facilitate a sale by the chosen seller.

3. Work with the seller to determine how he/she wants to proceeds with the sale.

A. As is

B. Fixed up totally

C. Quick sale through a buyer of ours.

The “Seller” may not know anything about the property, which can be good or bad. Do you want to allow someone to inspect it, and then notify about the defects so that you are then on notice and have to disclose to everyone thereafter? Do you want to do a quick sale, as is with all faults, to an investor who can close quickly? (I.E., how fast do you (and the other beneficiaries) want the cash?

Do you fix it up? With what money? Maybe keep the property in probate so that the estate can pay for the fixes, instead of all of the beneficiaries chipping in on pro-rata basis. 

What is probate?

Probate is a court proceeding wherein a court determines and designates an individual to act on behalf of the decedent’s estate. This person is referred to as a Personal Representative. A Personal Representative is required to be designated to act for a decedent’s estate, regardless of whether of not the decedent left a will. 

At Flatirons Real Estate Group, we are experts at selling real estate in probate, which can be an intimidating and complicated endeavor. Here, we answer some of the most frequently asked questions from our clients.

Who is the Seller?

In probate: the Personal Representative is the client. After title passes to the beneficiaries, all the beneficiaries will be the clients. Issues to consider: what if there are several beneficiaries? What about out of state beneficiaries? How do you get everyone’s signatures in a timely manner? What if the beneficiaries disagree about terms to negotiate in the sales process?

Who signs the listing agreement?

In probate: the Personal Representative signs the listing agreement with Flatirons Real Estate Group, and is our client. After title passes to the beneficiaries  all beneficiaries must sign the listing agreement. Issues to consider: what if beneficiaries can’t agree on whom to retain? What if some beneficiaries don’t like the terms in the listing agreement? 

Who signs the deed transferring title to the buyer?

In probate: the Personal Representative signs the deed.

After title passes: all owners must sign the deed conveying title to the purchaser. This can be accomplished through the use of powers of attorney.

What kind of deed is used?

In probate: Colorado has established a specific type of deed conveyance for sales through probate. It is referred to as a Personal Representative’s Deed. It is signed by the Personal Representative on behalf of the probate estate. The Personal Representative’s deed is effectively a form of bargain and sale deed that is executed by a personal representative on behalf of an estate. It conveys only the title that the estate owns as a result of the decedent’s death. A Personal Representative’s deed carries fewer warranties and representations than a general warranty deed or a special warranty deed. It therefore subjects the personal representative to fewer liability issues than the other forms of deeds.

After title passes:  Colorado allows for several different deeds to be delivered when conveying title as the seller if you are not in probate. The deeds types are:

• General Warranty Deed

• Special Warranty Deed

• Bargain and Sale Deed

• Quit Claim Deed

The type of deed to be used to convey title to the purchaser is something that will be negotiated with the purchaser and her broker in the contract to buy and sell real property.  However, in all reality, you will almost never see the use of a Quit Claim Deed or a Bargain and Sale Deed in a typical real estate transaction. This is because the purchaser would never agree to accept such deeds because they don’t offer the type of protections that a purchaser is paying for. Quit Claim and Bargain and Sale Deeds are generally more common when transferring property into a trust or other types of estate planning.

What are the disclosure rules?

In probate:  It is not uncommon for a Personal Representative to refuse to provide a seller’s property disclosure form to the buyer. This is because the Personal Representative has most often never owned the property, and never lived in the property. Therefore, the Personal Representative has good reason not to make any representations about a property she knows nothing about. This is more common in sales from estates than it is in sales from typical homeowners.

In  probate:  It is the Personal Representative who is the seller and who signs the listing agreement on behalf of the estate. The Personal Representative also signs the deed. The deed is a personal representative’s deed.

A general warranty deed requires the seller to defend title against all claims, even if the basis for the claim arose many years (even 50) before the seller became the owner. A Personal Representative’s deed, on the other hand, does not contain any warranties. This is because the Personal Representative is usually not in a position to know about the property enough to form the basis to make reps and warranties.

What are Colorado Real Estate Title Standards?

Colorado Real Estate Title standards are important to buying or selling property in Colorado. Especially if you are buying or selling property of a decedent. The Colorado real estate title standards are a collection of standards used within the real estate title insurance and legal communities to help title examiners determine if a proposed conveyance conveys “marketable” title.  

The Colorado Bar Association adopted title standards to set forth how the more experienced title examiners and conveyancers consider the impact of certain specified title issues on the marketability of title to real estate. The first lawyer’s committee convened for developing title standards was formed in 1942 by the Denver Bar Association. In 1946 the Colorado Bar Association adopted the then-existing title standards of the Denver Bar Association for statewide application. The title standards were last updated in November, 2020. 

Title Standards are relied upon by title insurance companies when deciding whether or not to insure a transaction. They can affect a real estate transaction dramatically. It can difficult or even impossible to close a residential transaction in Colorado without adhering to proper title standards. 

Title standards are not laws. They are, however, the “standards” used within the real estate title insurance community to determine if a transaction can ultimately produce “marketable title” for the purchaser.  

The title standards committee of the Colorado Bar Association considers current real estate title problems, and then drafts and proposes title standards or legislation for their solution. The affect of current statutes and case law in Colorado is considered by the committee when analyzing a particular title issue.

The Title Standards start with the assumption that title is marketable except for the effect of the facts addressed in a particular Title Standard. The effect of certain facts can cause an otherwise marketable title to become unmarketable, and thus unsellable using ordinary avenues of bringing a buyer and seller together for a transaction. 

Marketable title is the standard used for the Title Standards because it is the normal and customary measure that will meet the residential seller’s contractual obligation under the Colorado Real Estate commission approved contract to buy and sell real estate in the vast majority of situations. 

The Title Standards play a significant role in transferring marketable title to real estate in probate, or otherwise in property which has been inherited from a decedent. Specific requirements must be met to enable a seller to deliver marketable title at closing. We know those requirements and can help guide you through the transaction process to smooth and uneventful closing.