December 1, 2011
Authored by: Brent Howard and Cynthia D. Kennedy
A Georgia court in a recent case, Villas at Stone Mountain Condo. Ass’n, Inc. v. Blair (Ga. App., 2011), No. A11A0912 (the “Blair Case”), held that the children and heirs of a decedent owed the homeowner association fees on the decedent’s condominium despite the fact none of the heirs wanted the condominium. The fees accrued between the decedent’s death and foreclosure of the condominium by the mortgage company.
In the Blair Case, the decedent died without a Will and the decedent’s children (also her heirs under Georgia law) never opened an estate administration with the probate court nor signed any documentation to disclaim ownership of the condominium. When a Georgia resident dies without a Will, which is known as an intestacy, title to real property automatically vests in the decedent’s heirs effective as of date of death subject to an administration of the estate. An heir may decline an inheritance if proper procedures are followed. While an heir is not liable for the debts incurred by a decedent prior to death, an heir is liable for ongoing expenses of any property inherited from the decedent.
Many individuals are intimidated by the administration of a decedent’s estate, or the probate process, and often feel that the government or local court system places too great a burden upon them after losing a loved one, particularly when the estate is small and the procedure appears unnecessary. Our current system of ownership, however, requires a title holder to property. When an individual dies, probate provides a temporary title holder of property, which does not pass by law or contract, and a standard procedure to collect assets, pay debts and expenses and ultimately distribute property to the proper beneficiaries or heirs. After an individual dies, either the person or institution named in the decedent’s Will or selected under state law should petition the court to be appointed as the personal representative. Once appointed, the personal representative will: (1) gather all of the decedent’s assets; (2) sell assets if necessary; (3) pay all debts and expenses of administration; (4) distribute the remaining estate to the beneficiaries or heirs; and (5) close the estate administration. This process ensures that the decedent’s debts, expenses and assets are handled in a predictable manner by the personal representative of the estate.
As mentioned above, a beneficiary under a Will or an heir under state law may refuse to accept property. A qualified disclaimer, however, is required to be executed to satisfy federal and state law. To satisfy federal law, a beneficiary or heir: (1) cannot accept or benefit from the property being disclaimed; (2) cannot direct who receives the property; (3) must sign a written disclaimer; and (4) must provide the disclaimer to the personal representative of the estate within nine months of the decedent’s death. State laws may vary, but are typically similar to these federal requirements.
If the heirs in the Blair Case had opened an administration proceeding, they could have avoided being liable for the condominium homeownership dues. The estate would have been responsible for the homeownership dues to the extent of available funds, and then the personal representative could have worked with the mortgage company in moving the condominium to foreclosure. In addition, the children should have signed a qualified disclaimer allowing the condominium to pass as if they had predeceased the decedent. If all the potential heirs signed a qualified disclaimer, the condominium would have escheated to the state.
Thus, the Blair Case underscores the importance of properly handling the probate issues when a loved one dies regardless of the size of the estate or whether a Will exists. Many state agencies or courts offer advice through websites and pamphlets (in Georgia, for example, information regarding probate is provided by the Judicial Council of Georgia at www.gaprobate.org), and of course it is always helpful to consult with an attorney to determine how to properly handle a decedent’s estate.