Late father's lack of a will complicates a home sale

Q. My dad was planning on selling his home and moving to a senior community. Unfortunately, he passed away before he could get the house listed and sold. My mom passed away a few years ago. They had three kids, me and my two sisters. We would like to sell the house and divide the proceeds. The agent we spoke to said we would need to go through probate to be able to sell. Is this true?

A. Possibly. No one purchases a home these days without title insurance. Title insurance protects the purchaser against claims against the property, including claims that another party other than the grantor (seller) has an interest in the property. Accordingly, the title company diligently attempts to determine who owns the property and has the power to convey to a third party.

In your situation, upon dad's passing without a will, the state determines how his interests pass. In Illinois, the first class to receive intestate (without a will) property is spouse and children. If the decedent had a spouse and children, have ownership goes to the spouse, half to the children. If there is a spouse and no children, all goes to the spouse. And if there are children but no spouse, all to the children. This appears to be your situation.

Because your heirship is a simple one, some title companies will insure the conveyance from the surviving children to the new buyer. The children would submit an Affidavit of Heirship, stating dad was not married at the time of his death and had three children during his lifetime.

You will generally pay a higher premium for the title insurance as the title company is taking on additional risk in insuring the transaction. For instance, maybe there was a will leaving the property to a friend. Or the children have discovered the will, realize the will cuts them off from any interest in the property and they decide to make the will disappear. The transaction goes through and the kids divide the sales proceeds. Two months later, the friend learns of dad's death and has a copy of the will dad gave him. The friend opens an estate in dad's name and files a claim demanding he be paid his interest in the property. The title company will not only be required to defend the claim, but if the friend is able to convince the court the will is valid, it will likely be required to pay the friend the net proceeds from the sale of the property.

The other way to convey the property is through a court appointed administrator. Someone with an interest in the estate (in this case, likely one of the children) files a petition to open a decedent's estate. Notice is given to all other interested parties (in this case, the remaining two children) and absent any objections, the court will appoint the petitioner as the administrator of dad's estate. The administrator now possesses the power to perform virtually anything dad could have done, including selling the property. The administrator conveys a deed from himself/herself to the three children. Once that deed is recorded, the three children can do whatever they wish with the property.

Obviously there are costs associated with probating an estate that must be considered, presuming you have a choice between the above two options. The title premium likely will be lower if an estate is opened, as the title company is following the law by complying with the wishes of the court-appointed administrator. Title companies generally believe insuring a deed executed by a court-appointed administrator is less risky than insuring a deed executed by one or more heirs.

The place to start is by retaining an attorney to assist you with the sale. He or she can contact the title company to determine whether or not it will insure the transaction without opening an estate.

• Send your questions to attorney Tom Resnick, 910 E. Oak St., Lake in the Hills, IL 60156, by email to tom@thomasresnicklaw.com or call (847) 359-8983.