Bulletin: WV2022001

Dear Associates:

The West Virginia Small Estate Act (WV Code 44-1A-1 et.seg.) was enacted and became effective in July 2021. We have been receiving a few calls regarding same and its ramifications and procedures especially as same applies to creditors of any estate(s) filing under the Small Claims Act. (The Act)

Regarding insurability of any real property which may fall under the Act we have concerns as to the providing of notice (or lack thereof) to potential creditors of the estate of the decedent filed under the Act. Statutes of the Act are not definitive as to claims against the estate by creditors regarding any real estate owned by the decedent and what notice or procedure would circumvent a creditor from filing liens or claims against the real estate of the decedent. In addition, we have concerns as to whether the lack of any notice provided to a creditor would enable or provide additional time for a creditor to file a lien or claim against the estate even if all the statutory procedures of the Act were followed and same approved and recorded by the Clerk of the Court.

Therefore, given the concerns that we have regarding the above, our positions regarding this new act and insurability of real estate being conveyed or transferred therefrom are as follows:

1.Given the statutory period normally afforded creditors to file a claim or lien against an estate if the property was to be sold and/or conveyed by the estate beneficiaries to a purchaser within one year from the date of death of the decedent a full and final administration of the estate must be completed. If under the Act a Small Estate affidavit has been filed, then you must require that a full probate of the estate be done in order to insure.

2. If the estate is being fully probated, and if the statutory claims period has NOT expired you must escrow 100% of the sales proceeds until such claims period expires. Upon expiration of the claims period, you may release 90% of the sales proceeds upon a written agreement among the parties that the remaining 10% is to be released upon final settlement of the estate and such final settlement being recorded.

3. If the estate is under full probate and if the claims period HAS expired and no claims have been filed against the estate, and no final settlement of the estate has been recorded of record, you are permitted to insure. However, you must escrow 10% of the sales proceeds upon a written agreement between the parties that the remaining 10% will be released upon final settlement of the estate and such final settlement being recorded.

4. If the heirs and/or beneficiaries of the Small Estate, which has been fully administered under the ACT and such recorded with the clerk, have previously conveyed the real property to a bona fide purchaser for value, and that bona fide purchaser is now selling the subject property, you may insure without requiring full probate of the estate since same has been fully administered under the Act.

5. Should you have a situation where the subject property was held in joint tenancy with the right of survivorship between the parties, that property would pass by operation of law to the surviving party and any potential claims against the estate of the deceased joint tenant would not attach to the real estate of the surviving joint tenant. However, proof of death of the deceased joint tenant is required.

6. Under WV Code 44-2-27, the statute states that creditors shall have two years from date of distribution of the estate of the decedent to file a civil action or suit against the estate or personal representative of the estate. Therefore, if more than two years have expired from date of distribution on estates that do not have final settlements filed, you may insure without any escrowing of sums of money or without exception.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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