The two general rules that are applicable to homestead property are 1) homestead property is not freely devisable if the decedent/owner is survived by a spouse and/or minor child and 2) homestead property is exempt from creditors of a probate estate.

In the real estate/title context - homestead issues typically arise when a real estate agent or title company is asked to handle the sale/closing of a residence either by the Personal Representative of an estate or by the ultimate beneficiaries of the property. If you are confronted with the sale of what may have been a decedent’s homestead property here are some questions that should be asked and answered prior to the closing of the property:

Who really has title currently? Was a probate administration commenced? Was the decedent/prior owner survived by a spouse or minor child? If the decedent was survived by a spouse, was there a premarital agreement or post marital agreement/waiver whereby the spouse waived his/her homestead rights to the property?

Was the homestead held in the decedent’s sole name, Revocable Trust or other form of ownership? Was the prior transfer to the decedent/owner/trust valid (i.e., were any necessary waivers obtained)? Recall from Part 3 of this series, there are restrictions on certain transfers when there are spouses and/or minor children. Was the homestead property directed under the Will/Trust to be sold by the estate? If so, the homestead property will not be exempt from claims of creditors of the estate. If there is no spouse or minor child, who is the beneficiary of the property? Is there a Will? This is important, because if the decedent left the property to a non-homestead heir (usually homestead heirs are blood relatives), then the homestead residence may be subject to claims of creditors of the estate.

Technically, if the property is homestead property and the beneficiaries of such homestead property are heirs at law (i.e., a valid heir under intestacy laws), then an Order Determining Homestead Status should be obtained. The effect of the Order will be to vest title to the rightful beneficiaries retroactively to date of death. This means that the homestead avoids Probate and the Personal Representative has no responsibility over the property.

If you are confronted with any of the above issues and you have not sought legal advice as to how the transfer of the property might effect their rights or what legal/title issues may arise through the sale of such property, you should seek legal counsel with respect to handling the homestead and/or administration issues prior to signing the contract for sale of the property. Cox & Nici represents many estates with respect to the transfer of real property and homestead issues and is available as a resource to handle these complex matters.