Inherited a Home in Mid-Michigan? A Family's Guide to Selling It

Selling a home you inherited is rarely just a real estate transaction. Often it's a parent's or grandparent's house, full of memories, and it lands on you while you're already grieving. The good news is that it gets much more manageable once you know the order of things.

Whether it's in Flint, Grand Blanc, Fenton, Davison, Flushing, Linden, Holly, Swartz Creek, Lapeer, or Livingston or Oakland County, here's who can sign, how long it can take, the tax pieces to ask about, and how to protect an empty house meanwhile.

Step 1: Figure Out Who Has the Authority to Sell

Before anyone lists the house, you need to know who legally controls it. That depends on how the title was held when your loved one passed away.

• It goes through probate. If the home was in your loved one's name alone, a personal representative (sometimes called an executor) is usually appointed by the probate court. The personal representative's power comes from Letters of Authority issued by the court. Under Michigan law, a personal representative acting reasonably for the benefit of interested persons may sell estate property, including land, at a public or private sale, unless the will or a court order says otherwise (MCL 700.3715). Read the letters closely: the form has a spot where the court can note that the personal representative has no authority over the estate's real estate (SCAO Form PC 572, Letters of Authority). In a supervised administration, a judge oversees the estate and the personal representative's powers are more limited (Michigan Legal Help).
• It's in a trust. If the home was deeded into a trust, the successor trustee named in the trust usually handles the sale. Michigan's trust code gives a trustee, without court approval, the powers in the trust and, unless the trust limits them, the powers an unmarried competent owner has over their own property, subject to fiduciary duties (MCL 700.7816).
• It was jointly owned. How the deed is worded matters. With a joint tenancy with full rights of survivorship, the surviving owner generally takes full ownership. With a tenancy in common, the deceased owner's share passes to their estate instead (Michigan Legal Help: Jointly Owned Property).
• There's a lady bird deed. Michigan has no transfer-on-death deed statute for real estate. Many families use a "lady bird" deed, also called an enhanced life estate deed. The owner keeps full control for life, and the home then passes to the named beneficiaries without probate (MSU Extension; Michigan Bar Journal).

Not sure which applies? Start with the most recent deed. A title company or probate attorney can tell you what it means.

Your Local Resource: Genesee County Probate Court

If your loved one lived in Genesee County, the estate generally runs through the Genesee County Probate Court, on the 5th floor of the county courthouse at 900 S. Saginaw St., Room 502, in Flint ((810) 257-3528). The court explains that an estate can be opened informally, by filing an application with no hearing, or formally, by filing a petition that is set for a hearing before a probate judge. If your loved one lived in Lapeer, Livingston, Oakland, or another county, that county's probate court is usually your starting point.

Timeline Realities

This often takes longer than families expect:

• Getting appointed comes first. Until a personal representative has Letters of Authority (or a trustee is confirmed), nobody can sign a purchase agreement for the estate.
• Creditors get a window. After appointment, a personal representative must publish a notice telling estate creditors to present their claims within 4 months after the date the notice is published, and must also send notice to known creditors (MCL 700.3801). Ask your attorney how that affects when money can go out to heirs.
• Estates that run long have extra steps. If an estate isn't settled within a year of the first personal representative's appointment, the personal representative has to give the court and interested persons a notice of continued administration explaining why (PC 572).

Once someone has authority, the sale follows the usual path, which I cover in from accepted offer to closing.

Taxes: The Stepped-Up Basis and Property Taxes

Income tax on the sale. Here's some good news. According to the IRS, if you inherit a home, your basis is generally the fair market value on the date of death (or a later alternate valuation date if the personal representative chooses it), not what your parents originally paid (IRS Publication 523; IRS Publication 551). The IRS also treats inherited property as held for more than one year, no matter how long you actually owned it (IRS Publication 544). A date-of-death appraisal can be very helpful, and your CPA can tell you what it means for your gain. I covered basis and the home sale exclusion in my capital gains post.

The principal residence exemption. Michigan Treasury says that when the owner who claimed the principal residence exemption (PRE) dies, the exemption has to be rescinded. The personal representative or trustee should file a Request to Rescind (Form 2602) with the local assessor within 90 days of the death, and the exemption comes off on December 31 of the year of death. Missing the deadline can bring a penalty of $5 per day after the 90 days, up to $200, and a denied exemption can mean significant back taxes and interest (Michigan Treasury PRE Guidelines).

Uncapping. When the home sells, the buyer's taxable value generally uncaps the next year, just like any sale (I explained that for buyers in this post on property taxes after you buy). If a family member keeps the home instead, Michigan law doesn't treat a transfer of residential property to certain close relatives (such as a son, daughter, brother, sister, or grandchild) as an uncapping transfer, as long as the property isn't used for any commercial purpose afterward (MCL 211.27a(7)(u)). The same section has similar rules for trusts and life estates. If you're thinking about renting it out, talk with your assessor and attorney first.

Protecting a Vacant Home, Especially in a Michigan Winter

Call the insurance company right away. Michigan law lets home insurers base their underwriting rules on whether a dwelling has been unoccupied for more than 60 days when there's evidence of an intent to keep it vacant (MCL 500.2117). The Michigan Supreme Court has also enforced a policy that limited coverage once a home was vacant or unoccupied for more than 60 consecutive days (Ellis v. Farm Bureau, 2008). Read your policy's vacancy terms and ask whether you need a vacant-home policy or endorsement.

Winterize or keep the heat on. Frozen pipes are one of the most expensive surprises in an empty house. Michigan's MI Ready guidance says that if you're away, set the thermostat no lower than 55 degrees, have someone check the house, or shut off and drain the water system (MI Ready: Preventing Frozen Pipes). My winter selling post has more cold-weather tips.

Keep it looking lived-in. Shoveled walks, collected mail, and lights on timers all help.

Clearing Out, Condition, and Selling As-Is

Sorting through a lifetime of belongings is often the hardest part. Give family time to take keepsakes, then consider an estate sale company, donations, or junk removal for the rest. Many inherited homes sell as-is, especially when heirs live out of town. Others are worth a deep clean, paint, and a few repairs first. I can help you compare both with real numbers, and my pricing guide explains how we'd set the price either way.

What about the seller's disclosure statement? Michigan's Seller Disclosure Act lists transfers that don't need the standard disclosure form. Those include transfers ordered by a probate court in the administration of an estate, and transfers by a nonoccupant fiduciary in the course of administering a decedent's estate, guardianship, conservatorship, or trust (MCL 565.953). So a personal representative or successor trustee who didn't live in the home is generally exempt. If heirs already hold the house in their own names and sell it themselves, that exemption may not fit, so ask your attorney. Separately, the federal lead-based paint disclosure rule for pre-1978 homes still applies; its only listed sale exemption is for foreclosure sales (40 CFR 745.101). My seller's disclosure post covers both.

When Siblings Don't Agree

It's common for siblings to disagree: one wants to keep the house, one wants to sell fast, one lives out of state. A few things help:

• Share the same information with everyone, including a market analysis and the monthly cost to carry the house.
• Remember that the personal representative or trustee is a fiduciary, with duties to everyone who has an interest, not just themselves.
• Talk early about whether anyone wants to buy out the others, and at what price.
• If things truly stall, a probate attorney can explain your options, including asking the court for help.

When to Call a Probate Attorney or CPA

Call a probate or estate attorney if you're not sure who has authority, the letters are restricted, there's a dispute, there's a reverse mortgage or the estate may not have enough to pay its debts, or heirs want to keep the home. Call a CPA about the date-of-death value, what you can add to basis, and how to report the sale. I'm glad to work alongside both.

Let's Talk About Your Family's Home

If you've inherited a home anywhere in Genesee County or the surrounding areas, I'm happy to walk through it with you, give you an honest opinion of value, and help you make a plan at your pace. No pressure. Call or text me at (810) 962-4908.

Kennedy Christensen, Tremaine Real Estate. This post is general information, not legal or tax advice. Laws and rules can change, and every estate is different, so talk with a probate attorney and a tax professional about your specific situation.