Probate and Title FAQs: What Happens to a Property When its Owner Dies?
When someone dies, their loved ones have a lot of questions. One drives more discussion—and causes more stress—than most: “What are we going to do about the house?” Your Tennessee title and probate attorney can help you sort through complex legal questions to better understand next steps.
When someone dies, their loved ones have a lot of questions. One drives more discussion—and causes more stress—than most: “What are we going to do about the house?” Your Tennessee title and probate attorney can help you sort through complex legal questions to better understand next steps.
Here are some important dates to keep in mind:
60-days. Real property cannot be transferred for at least 60 days from the date of death. This is called the “wild deed” statute. Someone has 60 days to record any deed that the Decedent may have signed to them.
120-days. Once a Will is probated, creditors will have 120 days from publication to make a claim against the Estate to collect any debt.
6-months. A bona fide purchaser for value (BFP) or an arms-length transaction, can purchase the property free of claims from any creditor.
12-months. If you do not probate a Will or open an Estate, creditors have up to a year to file a claim against a decedent and open an estate to collect. This only applies when an estate has not been opened.
First Things First: Do They Have a Will?
In Tennessee, who owns a decedent’s property after their death depends on whether a Will is in place.
If someone dies without a Will (intestate), their property passes to their heirs-at-law (their lineal blood relatives).
If they have a Will in place, property goes to the devisees of the Will (whoever they designate in their Will to receive the real property).
Navigating an estate and transfer of property ownership is never easy, but having a Will makes things a lot simpler.
If They Have a Will…
If the decedent has a legally-binding Will, It’s time to get their Will probated. Without probate, a Will isn’t worth the paper it’s printed on, and the heirs can’t legally do anything with the decedent’s property.
In Tennessee, a Will has power once it is filed and accepted by the Probate Court of the County of the residence of the decedent. Usually, the real property passes outside the probate estate and is not under the control of the Executor unless the Will specifically gives that authority to the Executor and the real property is treated as personal property.
To get a will probated, you’ll need:
Death Certificate.
TennCare Clearance
Published Notice to Creditors: Usually done by the Court, to run for 120 days.
The probate process usually takes approximately six months to a year to complete from beginning to end.
Once you know if they have the power of the Court behind the Will, you can move forward accordingly.
If They Don’t Have a Will…
If the decedent dies intestate (without a will), their heirs will need to take the following steps:
Get a Death Certificate:
Get TennCare Clearance:
Get an Affidavit of Ownership executed by an uninterested party: This is someone with no interest in the property, like a neighbor, a pastor, or a family friend
Simplify Probate and Title Matters: Work with One Attorney
When dealing with property in an estate, working with a Tennessee probate and title attorney simplifies communication and makes the path forward clearer. There’s already enough on your plate when a loved one dies. Let us handle the legal headaches so you can focus on remembering them and honoring their final wishes. To schedule a free consultation with Blue Note Title, contact us today.
Is Your Buyer in Love with a Tall and Skinny? Here’s What You Need to Know
The start of the year is the time for dreaming big. For many, that means finding (and hoping to purchase) their new home. Your Nashville real estate clients want elegance, modern amenities, and convenience, ideally situated in growing neighborhoods like East Nashville or The Nations.
The start of the year is the time for dreaming big. For many, that means finding (and hoping to purchase) their new home. Your Nashville real estate clients want elegance, modern amenities, and convenience, ideally situated in growing neighborhoods like East Nashville or The Nations.
Translation: they are in love with a Tall and Skinny, also known as Horizontal Property Regimes (HPRs). These appeal to many buyers and are full of opportunities for realtors. But even proactive buyers may not find everything they need to know in a listing. That’s where your title attorney is valuable. Here’s what you need to know to help clients make an informed decision when looking for their dream home.
Is it a PUD or a Condo?
The main difference between a HPR and a Condo is who owns the land. Homeowners own the land on which a HPR is built, while a Condo Association owns the land in the latter. You must review the Master Deed site plan and definitions. Your client needs a clear understanding of their responsibilities, and the extent of their ownership/autonomy related to the property.
What are Three Types of Elements that Make Up an HPR?
A horizontal property regime consists of three elements: private elements, limited common elements, and common elements.
Private elements are the housing unit itself.
Limited common elements are the area surrounding the Private element, usually the yard and grounds around the Private element.
Common elements are the parts of the HPR that are owned by the association and are owned jointly by all the owners of the units.
Not all HPRs will have common elements such as shared walls or shared driveways.
Each of these elements is detailed and indicated on the site plan, found in the Master Deed.
It’s very important that your Tennessee title attorney explain exactly what your client is purchasing so they fully understand their responsibilities and ownership.
One of the biggest snags involving the HPR is the fact that the Association must be incorporated; even though, there are not any common elements. The homeowner must maintain the existence of the corporation by paying an annual $20 fee to the state as it is established with the initial filing when the HPR is created.
Further, if there are common elements, there are possible property taxes that are owned by the Association. Although minimal, these taxes need to be paid by the property owners. These taxes are not included in each unit’s property taxes. Even if there are no common elements, there will still be a map and parcel assigned to it by the county assessor.
Your Expert Partner for Tall and Skinny Real Estate
Your due diligence is what helps your client land their dream home, and avoid nightmares. Working with a trusted partner will give you peace of mind. Title law is our main riff. As Nashville’s HPR experts, we’re committed to keeping you, your client, and the title protected. Contact Blue Note Title today to request a free consultation.
What Does Title Insurance Protect the Owner From?
Purchasing a property—whether residential or commercial—is often one of the most significant investments you'll make in your lifetime. However, with large investments come potential risks, many of which can be hidden deep in the property’s history. This is where title insurance steps in, offering peace of mind and financial protection for property owners. But what exactly does title insurance cover, and how does it protect you as the owner?
This article dives into the risks title insurance guards against, ensuring you're well-informed as you move forward with your real estate transaction.
Protection Against Hidden Ownership Issues
When purchasing a property, the title—which proves your ownership—is carefully examined in a process known as a title search. However, no search is perfect, and there can still be hidden issues affecting your ownership rights. Title insurance protects you against these hidden risks, which may include:
Errors in public records: Mistakes during the recording of past deeds or property documents can come to light, potentially putting your ownership in question.
Undisclosed heirs: Occasionally, a rightful heir to the property may emerge, claiming they were unaware of their inheritance and disputing your ownership.
Fraud or forgery: Forged signatures, fraudulent claims, or misrepresented transactions can compromise the title to your property.
By covering these risks, title insurance ensures that even if unforeseen ownership issues arise, your rights as the property owner are protected.
Defense Against Liens and Encumbrances
Another significant protection offered by title insurance is safeguarding against undisclosed financial claims or legal disputes tied to the property. Issues such as liens or encumbrances could unknowingly exist when you acquire the property, threatening your ownership and financial investment. Common examples include:
Unpaid property taxes: Previous owners may have left unpaid taxes that result in claims against the property.
Judgment liens: Court judgments against prior owners could result in a lien on the property.
Mechanic’s liens: If contractors, subcontractors, or suppliers were not fully compensated for work on the property, they could file a claim.
With title insurance, you’re not only protected financially from these claims but are also provided legal defense to resolve the disputes.
Peace of Mind with Boundary and Survey Disputes
Boundary issues can be an overlooked risk when purchasing property. Over time, fence lines, driveways, or other features may encroach onto neighboring properties or fail to match survey records accurately. Title insurance helps address:
Boundary disputes: If a neighbor challenges a property line, title insurance can provide financial and legal protection.
Survey errors: Mistakes in survey maps or conflicting property descriptions can arise, leading to uncertainty about where your property begins and ends.
Rather than facing these issues alone, title insurance ensures you’re equipped to handle unexpected disputes effectively.
The Added Assurance of Legal Defense
One of the most valuable aspects of title insurance is not just its coverage of financial losses but also its provision of legal defense. If your ownership is challenged in court due to any of the scenarios above, your title insurance provider steps in to offer a robust legal defense. This eases the burden of navigating complex legal proceedings on your own and ensures your property rights are upheld.
Why Title Insurance is Worth the Investment
Given the potential risks associated with purchasing property, title insurance may feel like a small price to pay for the peace of mind it offers. Unlike other types of insurance, which require ongoing premiums, title insurance involves a one-time payment yet provides lifelong protection for as long as you own the property. This makes it a cost-effective and indispensable part of any property transaction.
At Blue Note Title, LLC, our goal is to make the process of acquiring title insurance as smooth and straightforward as possible. We work diligently to ensure your real estate transactions are harmonious, transforming challenges into a secure and successful closing experience.
At Blue Note Title, LLC, we specialize in helping clients in Brentwood, Tennessee, with residential and commercial real estate transactions. From safeguarding property ownership with title insurance to seamless closings, our team ensures every detail sings with precision.
Why It Matters to Have a Qualified Intermediary in 1031 Exchanges
If you want to harmonize your 1031 exchange, then you will need to have a Qualified Intermediary (QI). These transactions are complex and tricky, requiring you to follow specific rules and timelines. Any misstep can make the whole process sound out of tune.
Consider the QI as the conductor of the symphony, bringing together all the different parts, regardless of how challenging, to create something incredible — a property exchange without having to pay capital gains tax.
Here’s why it matters to have a Qualified Intermediary in 1031 exchanges.
Avoid Constructive Receipt
To qualify for a 1031 exchange, investors must follow the guidelines set forth by the IRS. One that is highly specific deals with the proceeds you received from the relinquished property. It states that they are not to be touched by the investor as they are to be set aside for the purchase of the like-kind property. Otherwise, capital gains tax would be owed.
The QI acts as a buffer between the funds and the investor, showing the IRS that they are tucked away safely, untouched, until the next transaction. The funds are held in a secure escrow that is not controlled by the investor.
This is referred to as constructive receipt.
Timeline Compliance
Sticking to a timeline is crucial for getting through a 1031 exchange successfully. For instance, the investor has 45 days from the day of the sale of their property to identify a potential replacement. Then, they have 180 from the sale day to close on the replacement property.
The QI ensures the exchanges remain within these deadlines and prevents any missed notes that may derail the entire performance.
Facilitating the Process
Completing and submitting forms, drafting documents, coordinating the exchange, adhering to the calendar, and holding the funds are just a few key steps in these intricate transactions. And they are handled by your QI who guides everyone through the process, doing everything necessary to keep the exchange on track so that it flows smoothly.
What’s more, having a QI gives all parties a point of contact to keep everyone marching to the beat of the same drum.
Trusted Guidance
When you have a QI on your side leading you through a 1031 transaction, you can move forward with confidence as you know that you will avoid costly mistakes. After all, these are experts who understand the rules and know how to overcome the complexities they bring with them.
Further, any questions or concerns you may have can be addressed because you are walking alongside the maestro.
Hit All The Right Notes with Blue Note Title, LLC
At Blue Note Title, LLC, we work closely with you to ensure that your 1031 exchange is handled with the utmost care. Much like a challenging jazz piece, these transactions require precision, coordination, expertise, and, sometimes, outside-the-box thinking.
Let our trusted, experienced agents help you increase your investment potential while decreasing your risk and liability.
Contact us today at (615) 385-5944.
1031 Exchange Property Types: What Qualifies and What Doesn’t
One of the major components in a 1031 exchange is replacing one property with another of the same kind. How do you know what property qualifies and what doesn’t? Here is a closer look.
One of the major components in a 1031 exchange is replacing one property with another of the same kind. How do you know what property qualifies and what doesn’t? Here is a closer look.
What is a 1031 Exchange?
A 1031 exchange is an option the IRS provides that allows you to defer capital gains while you exchange one investment property for another of equal or greater value. To take advantage of this, you must adhere to specific timelines and have a Qualified Intermediary, such as an experienced title company, to facilitate the transaction.
For instance, once you decide to sell a piece of investment property, you have 45 days from the sale date to find a like-kind property. How do you know what qualifies as this type of property? Here is how the IRS explains “like-kind” on their website:
“Properties are of like-kind if they’re of the same nature or character, even if they differ in grade or quality. Real properties generally are of like-kind, regardless of whether they’re improved or unimproved. For example, an apartment building would generally be like-kind to another apartment building. However, real property in the United States is not like-kind to real property outside the United States.”
The properties do not have to be the same type of property. For instance, a retail space doesn’t have to be exchanged for a retail space. They just need to be used for business, investment, or production.
Let’s take a look at what property types qualify.
What Types of Property Qualify for a 1031 Exchange?
Most investment properties that generate income or appreciation will qualify as properties that can be used in a 1031 exchange. The list below includes a few of the most common types seen in these transactions. However, it is important to note that this is not an exhaustive list.
Residential rental property
Commercial real estate
Vacant land
Farmland
Industrial property
Retail property
Apartment buildings
Multi-Family property
A few other things that can be considered for like-kind exchanges even though they aren’t exactly property include:
Water, air, and mineral rights
Oil and gas interest
Large equipment and machinery
What Types of Property Do Not Qualify?
Most properties for investment will qualify as a like-kind property in this type of exchange. After all, the term is rather broad. There are still a few properties that will not qualify due to the limits and restrictions set forth by the details of the Internal Revenue Code Section 1031. These properties include:
Primary residence
A second home
Flip properties
Inventory and supplies
Securities and financial instruments
Intangible assets
Partnership interests
Personal property, such as automobiles, boats, artwork, and jewelry, will also not qualify for this type of savings in capital gains as they are not allowed.
Again, this is not an exhaustive list. If you are unsure whether or not a property will qualify, it is always a good idea to work with an experienced title company.
Learn More About Your 1031 Exchange
The title agents at Blue Note Title, LLC have successfully handled many 1031 exchange transactions. We can answer your questions, help you adhere to your timeline, and properly document the process.
Are you interested in saving money by avoiding capital gains? Contact us today to get started.
What Every Investor Should Know About 1031 Exchanges
Every real estate investor’s strategy includes making smart moves, so it’s no surprise that many take advantage of a 1031 exchange. After all, selling an investment property will often require you to pay taxes on the proceeds — unless you reinvest those proceeds into a new like-kind property.
This article explores 1031 exchanges and what every investor should know.
What is a 1031 Exchange?
Often referred to as a like-kind exchange in the industry, a 1031 exchange allows real estate investors to essentially exchange one property for a similar one without paying capital gains tax on the profit from their sale. The rules to determine what is considered a “similar” property are very easy-going, though the rules of these transactions are not.
This refers to real property only that is considered an investment — not a primary or secondary residence.
A Step-by-step Overview of a 1031 Exchange
Before you decide to take advantage of this IRS tool, having an overview of what the process looks like can help.
Find Your Properties
Before you do anything else, you need to know the property you want to sell and find the property you want to buy. This new property must be like-kind to the property you currently own. Gather the details so that they can be shared when the time is right. Of the properties you choose to buy, you must close on one of them.
Select Your Qualified Intermediary
Your qualified intermediary is someone who acts as a facilitator of the exchange. This party will handle the transaction from start to finish so you want to make sure that they have plenty of experience with 1031 exchanges. Title companies are often chosen to fill this role.
Notify the IRS
Use Form 8824 to report the exchange to the IRS. This is completed and filed with your tax return. You will provide the details of the transaction, including the specifics of the properties, the timeline, and the people involved.
1031 Exchange Timeline
Sticking to the timeline is crucial if you want to complete the transaction and save on capital gains tax. Note that the IRS will not allow any extensions.
45-Day Rule
From the time you sell your property, you have 45 days to choose an exchange property. This needs to be in writing and must include the legal description of the property, signed, and provided to the seller and/or qualified intermediary.
180-Day Rule
You will have 180 days from the date you sell your property - or the date your tax return is due - (whichever comes first) to close on the new one. This deadline must be met or you will have to pay the capital gains tax from your sale.
1031 Rules You Need to Follow
The IRS lays the ground rules for these transactions quite well so that they can easily be followed by investors and those facilitating the transaction. Do not deviate from these rules or you may find yourself owing the IRS money.
The exchange property must be of equal or greater value — you cannot downsize your investment using this tool.
The properties must also be similar in function.
The proceeds from your sale must be held in escrow by your qualified intermediary.
In your written letter, you can provide details for up to three properties you would like to buy, but you have to close on one of them.
There are no exceptions to these rules.
Let Blue Note Title, LLC Handle Your 1031 Exchange
At Blue Note Title, LLC., we have the experience to guide you through your 1031 exchange, keeping you on track with your timeline and securely holding your money in escrow. And, of course, if you have any questions along the way, just ask.
Contact us today.
Common Pitfalls to Avoid in 1031 Exchanges
Section 1031 of the U.S. tax code allows investors to defer federal capital gains when selling a piece of investment property. It is a powerful strategy that many take advantage of if their plans are to replace one property with another like-kind property.
However, there are complexities to navigate — and even the most experienced investors can make small mistakes that lead to huge problems.
Avoiding these pitfalls can ensure your 1031 exchange is a success.
Failing to Stick to the Required Timelines
The IRS is very clear that there is a timeline that must be followed in order to maintain a qualifying transaction. Failing to stick to the deadlines can jeopardize the tax-deferred status of the exchange.
You have 45 days from the date of the sale to identify a replacement property. Then, you have 180 days to acquire that property. No exceptions.
Have a plan in place and work with a team that can help you stick to the timeline.
Not Working with a Qualified Intermediary
Experienced investors often find themselves in hot water when they try to do things on their own. They may underestimate the intricacies involved, including the planning and execution. Not only could this result in missteps, but it also violates the IRS requirements for a 1031 exchange.
It is required that you work with a qualified intermediary (QI). This is an uninterested third party that is hired to facilitate each part of the exchange, including the financial aspects. After all, the proceeds from the sale must be held by someone other than the seller.
Choosing the Wrong Replacement Property
The IRS is very specific when referring to what type of property can be used for the exchange. They refer to it as a like-kind property, one that is similar to the one that is sold.
Factors that need to be similar include the nature of the property, its use, and its location. If you are unsure whether your replacement property meets the criteria, discuss it with your QI.
Failing to Keep the Same Entities Throughout the Transaction
When it comes to a 1031 exchange, it is important to view it as one continuous transaction rather than two separate transactions. More specifically, the exchange must be a continuation of the first sale or investment. Because of this, the individuals or entities who are purchasing the new replacement property must be the same individuals or entities who sold the first property.
There may be exceptions in certain situations. This is something to discuss with your QI.
Improperly Documenting the Exchange
All of the details of your 1031 exchange need to be documented properly and reported to the IRS. This should be done using IRS Form 8824 — and filed for the tax year in which your original property was sold. If the sale and purchase of the second property is spread out over two years, then you will file the completed form with the previous year's tax return.
Not completing these documents and getting them turned in at the right time can be problematic and may lead to tax penalties. Consider it just one more reason to work with an experienced QI.
Avoid 1031 Exchange Pitfalls With Blue Note Title, LLC
Blue Note Title, LLC has extensive experience handling 1031 exchanges. We understand that there are so many specific details that need to be followed in order to successfully fulfill all requirements.
When you are ready, give us a call.
Who Prepares a 1031 Exchange?
Who prepares a 1031 exchange? Let’s talk about it.
Investors often use a 1031 exchange to avoid paying capital gains taxes when selling real estate. Rather, they agree to do a like-kind exchange for another property of equal or greater value.
No taxes on the proceeds sounds pretty good, right? Except — it’s not so easy. There are many intricacies involved in these transactions so it is no surprise that only certain parties are qualified to handle them.
Who prepares a 1031 exchange? Let’s talk about it.
An Overview of a 1031 Exchange
There is a lot involved in a 1031 exchange. Below is a very brief overview of the process.
Determine which property you want to sell and find the property you want to exchange it for. Remember, the property you are buying needs to be similar and equal or better quality than the property you are selling.
You have 45 days to identify the new property from the date of the sale.
Choose the right person to prepare your 1031 exchange.
File Form 8824 with the IRS to report the transaction. You will include all information about the properties and the timeline, submitting the completed form with your tax return.
Note that you will have 180 days from the date of the sale or after your tax return is due (whichever is sooner) to close on the new property. The IRS is very strict with these deadlines.
Qualified Intermediaries Prepare 1031 Exchange
According to the rules set forth by the IRS, you need an authorized professional known as a Qualified Intermediary (QI) to facilitate the 1031 exchange. This is a neutral third party that will hold the proceeds from the sale of the property until you find a new replacement property and reinvest the funds.
QIs must know how to handle these transactions to see investors through them. Those who fulfill this role are typically accountants, real estate attorneys, licensed real estate professionals, and title companies.
Choosing the right QI means reaping a few benefits, such as:
Securing your funds
Professional expertise
Advice and guidance
Why Choose a Title Company?
Title companies can be incredibly valuable when a 1031 exchange is part of your strategy. For instance, they bring a lot of local knowledge to the table. They understand local real estate markets and regulations.
A title team can handle more than just this transaction. They offer a comprehensive list of services, such as escrow, title searches, title insurance, and so much more. You can get everything handled easily all by one team.
What’s more, if you choose a title team that is experienced, you can feel confident they know how to properly handle your 1031 exchange, too. You may even find that they have a streamlined process in place to ensure your transaction goes as smoothly as possible.
Let Us Assist You With Your 1031 Exchange
At Blue Note Title, LLC we have experience successfully handling 1031 exchanges and we have streamlined processes in place to ensure that the entire transaction is hassle-free. If you are an investor looking to take advantage of this perk from the IRS, we are here for you.
Contact us today to get started.