When there is just one heir, that person generally serves as the administrator. Being the only heir, this person will be entitled to the entire intestate estate and may elect to receive the actual house rather than its cash value.
It is also possible that two or more heirs may wish to own the house in lieu of a cash payment from the estate, which will require an agreement between them to prevent its sale to satisfy each heir’s share. When two or more heirs elect to receive the house, they will take title together as joint owners, but not necessarily as joint tenants with the right of survivorship.
Another consequence of having an assigned value is that the house can be used to satisfy the deceased’s general debts, which will require its sale in order to convert its value to cash. This may not be necessary when the estate’s other assets are sufficient to pay all of the deceased’s debts.
When the estate does not have sufficient assets, any heir or heirs who want the house may seek to purchase it from the estate and provide the estate with the cash it needs to pay its debts.
In addition to general debts, such as credit card balances, estate obligations also include the intestate shares that may due to the heirs. Even though all of the estate’s general debts are paid, the estate must still satisfy the share of every heir. Once all the general debts are paid, any heir whose intestate share is less than the value of the house and who cannot afford to buy the remainder will be required to take a loan or forfeit the house.
Finally, any mortgage against the house will also need satisfied as a result of the transfer at the sole owner’s death. (Mortgages are contractual and most have terms that require the mortgage to be paid in full upon any transfer to another owner.) If there are insufficient assets in the intestate estate to satisfy the mortgage prior to its transfer to an heir who wishes to live in the house, the house will typically be sold to make the payment. Again, this sale can be made on the open market or to any heir who wishes to own it.
Controlling Intestate Law
It should also be noted that the division of real estate is governed by the intestate laws of the state where it is physically located, rather than the state of the owner’s permanent residence.
For instance, the intestate personal property of a person who lives in California is distributed according to California’s intestate laws, while intestate real estate located in New York and owned by the same person will be divided according to New York’s laws of intestacy.