§2.7 - Sale of Real Property During Estate Administration

• Jurisdiction: Washington

§2.7 SALE OF REAL PROPERTY DURING ESTATE ADMINISTRATION

Every personal representative holds the assets of the estate, real and personal, in a fiduciary capacity. Fulmer v. Gable, 73 Wn. 684, 132 P. 641 (1913). The personal representative has a duty to settle an estate as quickly as possible but without sacrifice to the estate. Wilson's Estate v. Livingston, 8 Wn.App. 519, 507 P.2d 902 (1973). The authority of the personal representative is to be exercised only in the best interests of the beneficiaries of the estate. One of the more significant responsibilities of the personal representative and the estate's attorney is to balance conflicting interests of the beneficiaries.

The charges against an estate that must be paid are debts, expenses of the last illness and funeral, expenses of administration, estate taxes, and family allowances. Ordinarily, to pay these charges the assets of the estate would be accessed in the following order: (1) any assets not disposed of by will; (2) the residuary estate; and (3) property subject to specific or general devises or bequests. A personal representative may sell real property during administration of the estate, including to pay charges against the estate. The method by which such a sale may occur, and the notice requirements, depend upon the authority of the personal representative and whether the appointment was with "nonintervention" powers (i.e., without intervention by the court). Any restrictions or directions expressed in the will as to the sale of real property must be strictly observed.

(1) Sales pursuant to nonintervention powers

Washington courts are required to grant nonintervention powers to the personal representative in the following circumstances: if the personal representative is named in the will, unless the will states otherwise, provided the estate is solvent and, in the case of an intestate estate, if the petitioning personal representative is the surviving spouse, the estate is solvent and consists of community property, and the decedent had no children from a prior marriage. RCW 11.68.011(2)(a)-(b). In the case of a personal representative appointed with nonintervention powers, it is only necessary to give notice to required parties upon application for the appointment of the personal representative, and then for the personal representative to give notice of the pendency of probate within 20 days of appointment in accordance with RCW 11.28.237. Thereafter, the personal representative can proceed to sell real property without further notice except to individuals who have filed a request for special notice under RCW 11.28.237 or if the court has otherwise ordered. (Because probate is an in rem proceeding, the court acquires the necessary power to deal with the property without further notice to heirs and devisees.) Nonetheless, courtesy and good judgment dictate that the beneficiaries of an estate be advised of the sale of material assets by the personal representative.

(a) Authority of personal representative with nonintervention powers

Nonintervention powers include the right to mortgage, encumber, lease, sell, exchange, and convey the real and personal property of the decedent, and to borrow money on the general credit of the estate, without an order of court and without notice of approval or confirmation, and in all other respects to administer and settle the estate without intervention of court. RCW 11.68.090. Any third party to a transaction with a personal representative is entitled to the conclusive presumption that the transaction is necessary for the administration of the decedent's estate. Once the court has granted nonintervention powers, the personal representative can settle the estateincluding selling real estatewithout further court order. In re Estate of Ardell, 96 Wn.App. 708, 980 P.2d 771, review denied, 139 Wn.2d 1011 (1999). Implicit in the nonintervention personal representative's power to sell or otherwise dispose of property is an obligation to exercise that power in good faith. See Russell v. First Nat'l Bank, 169 Wash. 430, 14 P.2d 14 (1932).

The lawyer for an estate plays a significant role in the sale of real property of the estate. The lawyer's principal responsibility is to see that an "estate sale" in the popular sense is not a sacrifice sale. The lawyer's role is to anticipate problems in selling estate property, counsel the personal representative, coordinate clearing the title to the real property, and prepare the necessary documents. The powers of the nonintervention personal representative allow sales of estate real property to be conducted in a manner similar to usual commercial and noncommercial sales of real estate. The nonintervention personal representative is also authorized to make non—pro-rata distributions of the real property contained in the estate. In re Estate of Ehlers, 80 Wn.App. 751, 911 P.2d 1017 (1996).

(b) Notice procedures

Personal representatives seeking nonintervention powers are required to give notice of their intention to apply to the court for such powers only when they are outside the class of persons to whom the court must grant such powers under RCW 11.68.011(2)(a) and (b). See §2.7(1) above. If notice is required, it...