I Inherited a House in Tennessee—What Should I Do First?
Inheriting a home in Tennessee can bring responsibility, uncertainty and emotion at the same time. The property may be a meaningful family home filled with decades of memories. It may also have a mortgage, insurance requirements, personal belongings, maintenance concerns and several people with an interest in what happens next, especially when it comes to inherting a home in Tennessee.
Families frequently have questions such as:
- Who has authority to make decisions about the home?
- Does an estate proceeding need to be opened?
- Who should communicate with the mortgage and insurance companies?
- Can belongings be removed from the property?
- What happens when several people inherit an interest?
- Should the home be kept, rented or sold?
- How can the family determine what the property is worth?
The right answers depend on facts that are unique to each estate. The deed, will, trust, debts, mortgage, family relationships and any court appointments may all affect what happens next.
For that reason, the first step is not necessarily deciding whether to sell. The safer starting point is identifying the property’s immediate needs and connecting with the appropriate legal, tax, mortgage and insurance professionals.
Important information: This article provides general educational information about inherited real estate. It is not legal, tax, financial, mortgage or insurance advice. Denise Yeo is a Tennessee-licensed Real Estate Broker and Certified Probate Real Estate Specialist, not an attorney, accountant, tax adviser, lender or insurance professional. Questions concerning ownership, probate, authority, creditor claims, taxes, mortgages, insurance or legal rights should be directed to appropriately licensed professionals.
Begin by separating immediate needs from long-term decisions
A family does not always have to decide immediately whether an inherited home will be kept, rented or sold. It can be helpful to separate immediate property-protection concerns from long-term ownership decisions. Immediate concerns may include:
- An active water leak
- Storm or freeze damage
- An unsecured door or window
- A lapse or change in insurance coverage
- Missed mortgage payments
- Unpaid utilities necessary to protect the property
- Pets or vulnerable occupants in the home
- Perishable food or other health concerns
Long-term questions may include whether the home will be occupied, transferred, rented or sold.
Addressing an urgent threat to the property does not require the family to make every other decision at once. However, before anyone changes locks, removes property, authorizes major work or allows someone to move into the home, the family should obtain guidance about who is legally authorized to act.
Identify who is authorized to make decisions
Being a family member, potential heir or person named in a will does not necessarily answer every question about authority. Depending on the circumstances, authority may rest with:
- A surviving owner
- A trustee
- A court-appointed personal representative
- One or more beneficiaries or heirs
- Another person identified through the deed or estate documents
A person named as executor in a will may still need to complete the appropriate court process before exercising certain powers. The authority to maintain, transfer or sell property can also depend on the wording of the deed, will, trust and any court orders.
A Tennessee probate or estate attorney can examine the relevant documents and explain:
- Whether probate or another proceeding is appropriate
- Who may act for the estate
- Whether the property passed outside probate
- Whether more than one person must approve a decision
- Whether court approval may be required
- Who must sign documents if the property is sold
A real estate broker may assist once the appropriate decision-makers have been identified, but the broker should not decide who owns the property or who has legal authority to sell it.
Locate the important property and estate records
Collecting documents can help the family’s attorney and other professionals understand the situation more efficiently. Useful records may include:
- The most recent recorded deed
- The original will and any amendments
- Trust documents
- Death certificates
- Mortgage or home-equity statements
- Homeowners insurance information
- Property-tax records
- Homeowners association documents
- Leases or occupancy agreements
- Utility statements
- Prior closing documents or title policies
- Receipts for significant repairs or improvements
- Property surveys, warranties and maintenance records
The recorded deed is particularly important. Family expectations, verbal promises and responsibility for household expenses may not establish legal ownership.
If an original will is located, a Tennessee estate attorney or the appropriate court clerk can explain the applicable procedure. Under Tennessee law, delivering a will to a court clerk does not, by itself, open an estate or appoint a personal representative. Additional filings may be necessary. General information appears in Tennessee Code § 32-1-113.
The Tennessee Administrative Office of the Courts also provides court and clerk information. Court clerks can provide procedural information, but they cannot give legal advice.
Preserve the home while authority is being confirmed
A home may remain vacant while the family gathers information. During that time, small problems can become expensive if they go unnoticed. Subject to the direction of the legally authorized person and appropriate professionals, practical property-protection topics may include:
- Whether doors and windows are secure
- Whether the heating or cooling system should remain operating
- Whether the water supply needs attention
- Whether storm damage or active leaks are present
- Whether lawn care or exterior maintenance is needed
- Whether alarm monitoring remains active
- Whether mail is accumulating
- Whether the property’s condition should be documented with photographs
- Whether vehicles, medication, pets or obvious valuables need special attention
Personal belongings should not be distributed, donated or discarded without proper authority. A seemingly ordinary object may have financial, sentimental or estate significance.
When family members disagree about access, occupancy or belongings, the issue should be referred to a Tennessee attorney rather than handled through a real estate broker.
Contact an appropriate insurance professional
The death of an owner or a change in occupancy may affect the home’s insurance. Policies differ, and the answer depends on the actual policy and insurer. An authorized representative can ask the insurance company or licensed insurance professional:
- What documentation is required to report the owner’s death?
- Does the existing policy remain in force?
- Does vacancy change the available coverage?
- Are periodic inspections required?
- Is different coverage needed during repairs or renovations?
- What happens if a family member occupies the property?
- What coverage would be needed if the property were rented?
- Who is authorized to make policy decisions?
The existing policy should not be cancelled based solely on general information. Coverage questions and decisions belong with a licensed insurance professional.
Determine whether a mortgage or other liens exist
An inherited home may have a mortgage, home-equity loan, reverse mortgage, judgment or other lien. A family member should not assume that inheriting an ownership interest makes that person personally responsible for every debt of the deceased owner. At the same time, a debt secured by the property cannot simply be ignored.
The estate’s attorney and the mortgage servicer can help determine:
- Who is authorized to communicate about the loan
- What documents are required
- Whether payments are current
- Whether taxes and insurance are included in an escrow account
- Whether the loan is a reverse mortgage
- Whether a qualifying successor can be recognized as a successor in interest
- What options may exist if someone wants to retain the home
- What payoff information would be required for a sale
Federal rules provide certain mortgage-servicing protections for confirmed successors in interest. However, those protections do not eliminate the mortgage or guarantee a particular loan outcome.
The Consumer Financial Protection Bureau offers general information about mortgage servicing after a borrower’s death. Questions about a specific loan should be directed to the servicer, a qualified attorney or an appropriately licensed lending professional.
- Ask an attorney whether probate is necessary
Not every inherited home follows the same path. A home might have been owned individually, jointly, through a trust or under another form of ownership. The estate plan may contain specific instructions. There may be multiple heirs, creditor claims or questions involving the validity or interpretation of documents.
Tennessee law addresses how real property passes following death, but applying that law to an individual family requires legal analysis. General statutory information appears in Tennessee Code § 31-2-103.
When there is no valid will, Tennessee’s intestate-succession statutes determine the heirs and their respective interests. The result depends on which relatives survived the deceased owner. General information appears in Tennessee Code § 31-2-104.
These statutes should not be used by a family or real estate broker to make an independent ownership determination. Blended families, deceased heirs, descendants of different generations, trusts and deed language can make the analysis more complicated.
A Tennessee attorney should identify the people who hold an interest and explain whether an estate, title or court procedure is required.
Identify expenses and possible estate obligations
A home can have substantial market value while the estate has limited available cash. Property-related expenses may include:
- Mortgage payments
- Property taxes
- Homeowners insurance
- Utilities
- Homeowners association charges
- Lawn care
- Safety-related maintenance
- Necessary repairs
- Appraisal, legal or administrative expenses
- Costs associated with preparing or selling the property
The estate may also have other debts or creditor claims. Tennessee probate law contains procedures and deadlines involving creditor notices and claims. Those procedures should be handled by the personal representative and legal counsel, not by the real estate broker.
A careful record of authorized property expenses may help the estate’s attorney, accountant and personal representative. The attorney or tax professional can explain how expenses should be paid, documented and potentially reimbursed.
Determine whether TennCare estate recovery needs attention
TennCare estate recovery may be relevant when a deceased person received certain long-term-care benefits after age 55. TennCare explains that estate recovery applies only under specified conditions and that waivers or delays may apply in certain circumstances. TennCare also states that family members are not personally responsible for the deceased member’s debt; recovery is directed toward property belonging to the estate.
An estate representative or attorney can request information and determine whether a release, waiver or other documentation is necessary. Current state information and forms are available through the TennCare Estate Recovery program.
Denise does not determine TennCare eligibility, liability, waivers or recovery rights. Those matters belong with TennCare and the family’s attorney.
Obtain the appropriate kind of property valuation
Families may need different types of property-value information for different purposes. A qualified appraiser may be needed when a formal valuation is required for an estate, court, tax, lending or family purpose. A real estate broker’s comparative market analysis serves a different purpose. It can help an authorized decision-maker understand:
- Current competing properties
- Recent comparable sales
- The home’s observable condition
- Likely buyer expectations
- Potential preparation options
- A possible market-positioning strategy
A comparative market analysis is not the same as a formal appraisal and should not be presented as one.
Property value can also have tax implications. The IRS explains that inherited property generally receives a basis connected to its fair market value at the date of death, although exceptions and alternate rules can apply. Current general information appears in IRS Publication 551 and IRS Publication 559.
Only a qualified tax professional should advise a family about basis, deductions, capital gains, estate income or tax filing requirements. Denise does not calculate or predict a client’s tax liability.
Compare keeping, renting and selling only after the facts are clear
Once authority, ownership, obligations and property condition have been clarified, the authorized decision-makers can compare their options.
If the home may be kept: The family may need professional guidance about ownership, financing, maintenance, occupancy and any proposed buyout of another person’s interest.
If the home may be rented: The family may need legal, tax, insurance and property-management guidance before creating a landlord-tenant relationship.
If the home may be sold: The authorized seller can begin considering:
- The property’s present condition
- An as-is sale versus selected preparation
- Safety or maintenance issues
- Personal-property removal
- Current local competition
- Pricing and marketing strategy
- Showing and access arrangements
- Offer terms
- Anticipated real estate transaction expenses
The attorney and closing professional remain responsible for legal authority, title, deed preparation and legal documents. Tax questions remain with the tax professional. Mortgage questions remain with the lender or servicer, and insurance questions remain with the insurance professional.
Denise’s role is limited to the real estate portion of the decision and transaction.
When several people have an interest in the home: Shared inheritance can make communication more difficult. Families may need to discuss:
- Whether everyone wants the same outcome
- Whether one person wants to retain the property
- Who is authorized to approve expenses
- How maintenance decisions will be documented
- Whether anyone is occupying the home
- Who will communicate with professionals
- How offers will be evaluated if the home is listed
A real estate broker can provide market information and facilitate communication concerning a potential sale. A broker cannot determine each person’s legal rights, settle a family disagreement or interpret the will. Disputes about ownership, possession, reimbursement, access or authority should be directed to Tennessee legal counsel.
The role of a Certified Probate Real Estate Specialist
Denise Yeo is a Tennessee-licensed Real Estate Broker serving Knoxville and surrounding East Tennessee communities. She also holds the Certified Probate Real Estate Specialist designation.
The designation supports her understanding of the practical considerations that can accompany estate-related property. It does not authorize Denise to practice law, provide tax advice, evaluate insurance coverage or interpret mortgage rights. Within the real estate scope of practice, Denise can assist an authorized property owner or estate representative by:
- Observing and discussing the property’s physical condition
- Preparing a comparative market analysis
- Explaining current local market conditions
- Discussing how buyers may respond to the home’s condition
- Comparing an as-is marketing approach with selected preparation
- Developing a pricing and marketing strategy
- Coordinating property access with authorized parties
- Communicating with an out-of-state representative
- Presenting and explaining real estate offers and transaction terms
- Coordinating the real estate transaction with the client’s attorney, title company and other selected professionals
When a question goes beyond the real estate transaction, Denise refers the question to the appropriate licensed professional.
A practical starting checklist
Families responsible for an inherited home can use the following list to organize conversations with their professional advisers:
- Identify urgent threats to the property.
- Locate the deed, will, trust and mortgage records.
- Ask a Tennessee attorney who has authority to act.
- Ask an insurance professional about current coverage.
- Ask the mortgage servicer about the loan and required documentation.
- Ask counsel whether probate or another estate procedure is necessary.
- Determine whether TennCare estate recovery may be relevant.
- Keep a record of authorized property expenses.
- Obtain the appropriate appraisal, market analysis or both.
- Consult a tax professional before estimating tax consequences.
- Compare keeping, renting and selling after the facts are understood.
A calm real estate conversation can be the starting point. An inherited home can be an asset, a responsibility and a place filled with family history. A family does not have to begin with the question, “How quickly can the house be sold?” The conversation can begin by identifying the home’s current condition, the professionals who need to be involved and the real estate options worth exploring.
Families responsible for inherited property in Knoxville, Knox County, Blount County, Anderson County, Loudon County or surrounding East Tennessee communities may contact Denise Yeo for a no-pressure conversation about the property’s condition, current local market and possible real estate approaches. When legal, tax, mortgage or insurance questions arise, Denise encourages families to obtain guidance from the appropriate licensed professionals before making a decision.
Important professional-scope notice: This article is for general educational purposes only. It does not provide legal, probate, tax, accounting, mortgage, financial or insurance advice. It does not create a broker-client, attorney-client or other professional relationship. Laws, regulations and individual circumstances may change. Readers should consult appropriately licensed Tennessee legal counsel and other qualified professionals regarding their circumstances.
Real estate contact information
The Ferguson Company
Tennessee Firm License #15429
10257 Kingston Pike
Knoxville, Tennessee 37922
Office: 865-690-1300
Denise Yeo, Real Estate Broker
Tennessee License #349675
Certified Probate Real Estate Specialist
Mobile: 865-661-3111
DeniseYeoRealtor.com