The owner of a Brooklyn, New York brownstone building died in 2009. The executor of her will sold the property to a personal acquaintance in 2011 for $670,000. Three days later, the purchaser sold the property for $1.3 million.
A date of death appraisal valued the property in 2009 at $800,000. The assessed value was $1.1 million for 2010/2011 and $1.3 million for 2011/2012.
The executor failed to broadly market the house, order appraisals to determine the current market value, or hire an independent experienced broker familiar with selling Brooklyn, New York properties. He relied solely on a personal friend to sell the house who presented only one buyer, a mutual acquaintance, to the detriment of the beneficiaries.
The Kings County, New York Surrogate Court found that the executor had breached his fiduciary duty by selling the property below its fair market value of $1.3 million, by failing to exercise due care and diligence to sell the property on terms that were most advantageous to the estate beneficiaries, and by failing to exercise good business judgment in the sale of the property. The court surcharged the executor $630,000 plus 6% interest.
This was the difference between the fair market value at the time of the sale and the price that the executor had sold the property for. For further information on New York Executor’s duties contact New York Estate Attorney Robert Friedman at (716) 333-5144. A free copy of The Executor’s Legal Survival is available here, free of charge.