Real Estate . . . When does it “real”ly transfer to my heirs?

When people say that real property (which refers to real estate such as your home, as opposed to personal property such as your chairs, tables, jewelry, etc) passes “outside of probate” what does that mean?

Simply put – real estate transfers to the new owner at the time of the decedent’s death. It is not subject to the probate process and it transfers immediately (with some provisions that we touch on below).

North Carolina General Statute § 28A-15-2 states that: “The title to real property of a decedent is vested in the decedent's heirs as of the time of the decedent's death; but the title to real property of a decedent devised under a valid probated will becomes vested in the devisees and shall relate back to the decedent's death, subject to the provisions of G.S. 31-39”

Broken down – the above statute provides that:

  • If someone dies without a will any real property owned at death immediately passes on to the next of kin.
  •  If a person dies with a valid and properly probated will– the real property passes on to the beneficiaries under the will with the date of transfer relating back to the date that the person passed away.
  • Any rents from the real property will go immediately to the new owner beginning at the date of death. Income will not go to the decedent’s estate. Taxes accrued from the date of death will also be billed to the new owner.


Still curious what this all means? Some common questions we’ve heard over the years are below:

  • “Why didn't I get a deed?” Because North Carolina doesn’t require one. All that is needed to prove ownership is the death certificate and the probate file. Nice and simple.
  • “What if the estate had debts and expenses?” In this instance, the executor of the estate may pull the real property back in to the estate in order to sell the real property to generate the funds to pay creditors – but only if it’s necessary to pay the debts and expenses of the estate. This option exists whether or not the decedent died with a valid will.
  • “If I inherited land under a will, what is my tax basis?” Generally, the tax basis of inherited real property will be the fair market value at the time of the decedent’s death. Often clients ask whether they can deed over property before their death – and while they can – they run the risk of creating some tax complications for the person inheriting the real property, as the tax basis before death will be the “value” that they paid. Therefore, someone who is gifted land for $0 but sells the property for $200,000 will have to pay capital gains tax on the $200,000. Alternately, a person who inherits land with a fair market value of $200,000 who then sells the property for $200,000 will have no capital gains tax. (This being said, there are times when, for Medicaid purposes, it might make sense to remove property from an estate, for issues surrounding joint tenancies, or other such issues – it’s always best to consult with a tax advisor and/or attorney before making these decisions).
  • “What if the real property still had a balance on the mortgage?” Congratulations, you may have now inherited some debt along with the property. Unless the will specifically instructed the executor to pay off any mortgages on the land, mortgages and other liens or encumbrances will transfer with the property, subject to the mortgage-holder’s requirements.
  • “Why does it matter that the real property will not have to go through North Carolina probate?” A primary reason is that the probate process can be extremely time-consuming. Receiving the real property before the probate process is complete means that beneficiaries under the will won’t have to wait until the estate is settled to have the asset or receive any rents due from the real property. Additionally, having fewer assets in the estate for probate purposes generally means reduced costs on the administration end.


If you have further questions or want to discuss this in more detail, don’t hesitate to contact us.