A PUBLICATION OR THE TITLE COMPANY OF NORTH CAROLINA
ESTATES -SALES BY PERSONAL REPRESENTATIVE PURSUANT TO POWER CONTAINED IN A WILL AND RELATED PROBLEMS
in Chapters 28A and 32 of the North Carolina General Statutes have caused
conflicting opinions regarding when a "personal representative"
(for example, an executor) can sell real property pursuant to a power of
sale set forth in the testator's probated will. A review of relevant
statutes and cases is helpful.
28A-17-8 states that a sale of real property made pursuant to authority
given by will may be either public or private and may be on such terms as
in the opinion of the P.R. are most advantageous to the estate. The
statute contains no requirement for a court order. The statute does not
require the sale to be for making assets to pay debts of the estate.
However, the statute seems to include such a sale.
Before discussing this last sentence's reference to G.S. 32-27(2), a threshold issue must be addressed. G.S. 28A-15-1's reference to assets being available for discharge of debts and other claims, including the references in G.S. 28A-15-1(c), and the statement that a court order to do so is not required for a sale made pursuant to authority set out in the will, merely establishes the rule for a sale to make assets to pay debts and claims. These references do not mean that other express powers set out in the will pursuant to which the P.R. can sell real property for reasons other than to make assets to pay debts and claims cannot be exercised without a court order. The terms of the will would control. See G.S. 28A-13-3(a)(31); G.S. 28A-17-8. Therefore, if Testator devised property to Adams in clause 1 of the will but in clause 3 appointed Barber as executor and stated, "my executor has full power and authority to sell, mortgage and convey my real property without court authority," no court order to sell the property devised in clause 1 would be needed. This would also seem to be the case if the words "without court authority" were omitted. If there is not such an express power in the will and, for example, the only power granted is that found in G.S. 32-27, further analysis is required.
The case of Montgomery v. Hinton, 45 N.C. App. 271, 262 S.E. 2d 697 (1980), should be noted. The case dealt with a will that left the property to the beneficiary and granted the P.R. all G.S. 32-27 powers. The court held that G.S. 32-27(2) was not applicable since the P.R. was not devised title. Therefore, the P.R. did not "hold" title under G.S. 32-27(2). The P.R. could not use the power to sell and should have pursued a special proceeding to sell. (G.S. 28A-15-2(b) should be noted. It vests title in the beneficiaries upon probate of the will. However, this is subject to the will's terms.)
Hinton, the court dealt
specifically only with G.S. 32-27(2)'s power entitled, "Sell and
Exchange Property." The court did not specifically deal with G.S.
32-27(3)'s power, entitled "Invest and Reinvest." This power
includes the power to "invest and reinvest" in any real or
personal property and other assets. Should the Hinton
court have held that G.S. 32-27(3) allowed the sale? The threshold
question is, under G.S. 32-27, when it comes to the sale of real property,
is G.S. 32-27(2) exclusive, or can G.S. 32-27(3) be considered? The answer
is uncertain. G.S. 32-27(2) clearly refers to a power to sell, whereas
such power under G.S. 32-27(3) would have to be implied as is discussed in
the case analysis below. On the other hand, G.S. 32-27(2) could be
construed to be limited to when the executor "holds" title and
so, if otherwise appropriate, a power to sell when title is not so held
could be implied under G.S. 32- 27(3). And, there is nothing in G.S. 32-27
or G.S. 32- 27(2) to indicate that G.S. 32-27(2) is the only portion of
G.S. 32-27 that can be utilized. If G.S. 32-27(3) should have been
considered in Hinton, a review
of possibly relevant cases is in order.
In First Union National Bank of North Carolina v. Broyhill, 263 N.C. 189, 139 S.E. 2d 214 (1964), the will created a trust. The devise to the trustees required the trustees to divide assets into four equal shares and be administered as four separate trusts. The children were entitled to the income during life. In addition, the trustees, in their exclusive discretion, had the power to invade and payout of the principal such amounts as may be necessary to provide each child with sufficient funds for support provided that the trustees took into consideration other resources that the child had available to him. The trustees had the power to disburse to grandchildren for support. The will conferred-d no express power of sale. The issue was whether a power to sell without a court order was implied. The power can be implied; it need not be express. The court noted that the executor was granted the power to sell an or any part of the real property at public or private sale on such conditions deemed expedient to the executor, but no such express power was given to the trustees. And, the trustees were given no power or direction to invest and reinvest the estate assets as in other reported cases. Therefore, the court held that there was no express or implied power of sale. Among the cases cited was Hall v. Wardell, 228 N.C. 562, 46 S.E. 2d 556 (1948).
In Hall, the will provided that (1) the property was devised to the wife to be held and income to be used by her during her life, the principal to be invested and kept invested by her as she deemed best; and (2) the property after the death of the wife passed to two trustees to keep the property invested as they deemed best; and (3) the wife may use the property as she wished for certain purposes with the residue to be used by the trustees as set out above. The court held that a power of sale was implied from the will's language and stated that the power to invest and consume the principal, or to invest and manage the estate or to invest and keep invested the consumed principal implied a power to sell.
In sum, it would appear that the Hinton court could have utilized the principles in G.S. 32-27(3) which statute, based on the above cases, seems to imply a power of sale. However, the court may have been disinclined to do so because it may have believed that G.S. 32-27(2) was exclusive as to such matters, which it is not, expressly; G.S. 32-27 should be clarified. And, to the extent that Hinton is a problem, G.S. 28A-15-1(c) does not fix it in reference to G.S. 32-27(2) since, under G.S. 32-27(2), the executor must still "hold" title.
Obviously, the will must be read carefully, In James v. James, 58 N.C. App. 371, 293 S.E. 2d 655 (1982), the will gave the executors: "the full power and authority to sell in such manner as they in their sole and absolute discretion may determine to be proper any and all property described in the second item of my will and to convey good title to the purchaser or purchasers." 58 N.C. App. 371, 374. If the will had stopped here, the executors could have sold the property without a court order. However, the will also stated: "This authority shall not be obligatory upon my executors but can be exercised by them if in their judgment such a procedure will facilitate the settling of my estate." 58 N.C. App. 371,374. The Court held that since the executor's discretion to sell was limited to matters which would facilitate the settlement of the estate, the sale, to avoid a partitioning proceeding, was not a valid exercise of the power of sale and did not divest the petitioners of their interest in the real estate. Id. at 375.
to G.S. 28A-17-9, if a decedent has contracted to sell real property his P.R. may
execute and deliver a deed pursuant to the contract. No court order is
See G. S.
28A-13-6 (exercise of powers of joint personal representatives).
Other powers in G.S. 32-27, which can be incorporated by reference into a will or trust, are G.S. 32-27(8) (management of real property) and G.S. 32-27(12) (borrowing money and mortgaging). Other provisions of G.S. 28A-13-3 which should be noted are G.S. 28A-13-3(a)(7) (relinquishing rights in property when it is valueless or of no benefit to the estate) and G.S. 28A-13-3(a)(12) (borrowing money and mortgaging, which is subject provisions of G.S. 28A-17-11).
With respect to borrowing money as permitted b G.S. 28A-13-3(a)(12) and G.S. 28A-15-1(c) as well a under other authority such as G.S. 32-27, Hunter v. Newsom, 121 N.C. App. 564, 468 S.E. 2d 802 (1996) should be noted. The court held that a deed of trust given by an executor as executor and individually was invalid since it did not secure a debt of the estate incurred for purposes of paying estate debts and taxes. The court cited the following will provision: "I hereby grant to my Executor...continuing absolute discretionary power to deal with any property, real or personal, held in my estate..., as freely as I might in the handling of my own affairs. Such power may be exercised independently and without prior or subsequent approval of any court or judicial authority and no person dealing with the Executor...shall be required to inquire into the propriety of any of. ..[his] actions." (Emphasis added.) The court held that "we do not read this language as extending any addition of authority or power to the executor and cannot be interpreted to authorize any act which is not otherwise authorized."
conclusion, Chapters 28A and 32 are in need of clarification. Any effort
to clarify should concentrate on the issues discussed above as well as the
P.R. selling leasing or mortgaging the property free and clear (liens or
subject to liens, with or without a court order and specify under what
circumstances a grantee, lessee or lender can rely upon the executor's
transfer of the property. However, G.S. 28A-17-8 and G.S. 28A-15-1(c) seem
to mean that a power to sell, mortgage or convey real property granted to
the executor, without any restriction, should be enough to permit the
executor to sell, mortgage or convey, without a court order, for any
reason and even if the land has been devised to a devisee elsewhere in the
will and has not been devised to the executor. The will can expressly
change thin result. And, more express will drafting (for example, by
making "clause 1" in the example in the sixth paragraph of this
article expressly subject to the power in "clause 3") can reduce
Will construction is a matter of ascertaining the testator's intent
from the four corners of the will, as opposed to arbitrary interpretation