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An assignment of contract where the seller is an estate and the PR's letters may be restricted

A purchase agreement with an assignment problem worth working through as a scenario. Setup: estate is the seller, PR signed, contract has a standard assignment clause allowing the buyer to assign without seller consent. Price 96, buyer intends to assign at 106. Property is a townhouse in a decent suburban market, ARV maybe 175 with 40 of work, so the numbers aren't the issue. Two things in a file like this deserve attention. First, the letters attached to a probate file can carry a limitation regarding the sale of real property. Language suggesting court approval is needed for a conveyance sometimes appears with no contingency for it in the contract, no reference to a court order, nothing making closing conditional on approval being obtained. The contract can read as if the PR has full authority when that isn't settled. Whether the letters actually restrict a given sale is a state law question for an attorney in that state; the point here is simply that the document alone doesn't resolve it. Second, and this is the harder question: if court approval is required and the court approves a sale at 96 to a named buyer, what happens when the buyer at closing is a different entity because the contract was assigned? Does an approval attach to the price, the person, or both? Some jurisdictions have petitions that name the purchaser specifically. If so, an assignment could require a second approval, blowing the timeline, with the assignment fee now visible to a judge and possibly to the heirs. The practical fork: add a court approval contingency and an outside date and accept the delay, or restructure to close in the buyer's own name with a double close instead of assigning, which costs two sets of closing fees and requires funding that might not be preferred. A third possibility worth chewing on: the PR doesn't know the letters are restricted and the title company catches it three days before closing, forcing a scramble. That's an argument for calling the estate's attorney directly early rather than waiting. What would you add to the contract, and has anyone dealt with an approval that named a specific purchaser?

dmitri_248 CB2CPRO 11

Answer

stephen_ok9ActivePRO

Call the estate's attorney this week. Everything else in your post is downstream of what that person says, and they have every incentive to tell you, because a failed closing is more work for them than a phone call.

On the assignment question, the reason I'd lean toward the double close even at the cost of two closing fees is the visibility issue you raised. If the fee is sitting in a court file where an heir can read it, you've created a reason for someone to object to a sale that was otherwise going through. That's not a legal risk exactly, it's a human one, and human objections in probate cost months.

The part I'd want your buddy to answer before any of this: does he have the funds to double close or is he counting on a transactional lender? Because that changes whether option two is even available to him, and if it isn't, the contingency route is the only one and the timeline conversation happens now rather than in week six.

stephen_ok9ActivePRO

2 replies

derekj19ServicePRO

Curious about the mechanics from the other side. If the PR genuinely doesn't know the letters are limited, is the estate's attorney the person who should have told them, and would that attorney be annoyed or relieved to get your call? I'd assume relieved but I've noticed people in this business often don't want to hear from a buyer's side directly.

derekj19ServicePRO

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