The Guide to Selling Inherited Property in South Carolina

Many people who inherit property in South Carolina choose to sell. There are plenty of legitimate reasons for this, but regardless of why, if you’re planning on selling a home you inherited, you’re probably wondering what the process will be like.

Fortunately, we’ve already done all the legwork for you. This comprehensive guide should answer all your most pressing questions and help make selling inherited property in South Carolina as smooth and uneventful an experience as possible.

What is Inherited Property?

Inherited property is a broad term that covers anything that is left from a deceased person to their heirs or named beneficiaries. This can include items of value, like vehicles and homes, as well as personal belongings that are sentimental in nature.

In South Carolina, the inheritance process typically involves a legal proceeding known as probate. This is when a court oversees the settlement of the decedent’s estate, including making sure that all outstanding debts are paid and any remaining assets are distributed to their rightful new owners.

If you recently inherited a home that’s located in SC and are planning to sell it, it’s important to understand what to expect so you can plan and prepare accordingly. Let’s explore this in greater detail below.

What to Do When You Inherit a Home in South Carolina

Initiate the Probate Process

To start the probate process, an application must be filed with the probate court in the county in which the decedent lived. The application must be submitted along with a copy of the death certificate and the original will (if one exists).

In South Carolina, the probate process can take anywhere from several months to a year or more, depending on the circumstances and the complexity of the estate. It is in your best interest that you remain as organized as possible throughout this process.

Assess the Property

The next step after initiating probate is to have the property professional appraised. This serves two purposes. First, it provides you with the fair market value of the home, so you’ll know how much to sell it for. And second, it establishes a basis for tax purposes. This will come into play when the property is sold, and we’ll go over the details of this below.

Prepare the Property for Sale

Another important step once you’ve inherited property in South Carolina is to determine whether you’re going to invest money into fixing it up (if necessary), or if you’d prefer to sell it As-Is.

Keep in mind that if you do decide to repair or renovate the home, you’ll be on the hook for all expenses associated with keeping up the home until it sells. This may include everything from mortgage payments and utilities to insurance and property taxes.

Legal Aspects of Selling Inherited Property in South Carolina

Transfer of Ownership and Title

As with most states, South Carolina requires that a property’s title be officially transferred into the name of the heirs or beneficiaries before it can be legally sold. In most cases, this step is handled during the probate process, when the assets are distributed to their rightful new owners.

Pay Off Mortgages and Clear Liens

When you inherit a home, you also inherit any and all encumbrances associated with that property. This includes outstanding mortgage loans as well as liens that may have been placed on the home prior to the previous owner’s death.

These things must be settled before you can sell, so be sure to check with the lender as well as the local records office to determine what, if anything, you will need to take care of.

Disclosure

The law in South Carolina requires that any seller of residential real estate must provide a written disclosure statement outlining any known issues that could negatively impact the value of the property. This may include, but is not limited to:

• Structural defects 
• Malfunctioning systems 
• Water damage 
• Past or current pest infestations 
• Environmental hazards like lead-based paint, asbestos, or radon gas 
• Property restrictions

Failure to provide this disclosure could result in legal implications.

Financial Impact of Selling Inherited Property in Social Carolina

Taxes

• Property Tax: When you inherit a home, you become responsible for any property taxes that are due. In South Carolina, the property tax rate varies from county to county, but the average is 0.46 percent of the property’s assessed value.
• Transfer Tax: South Carolina imposes a transfer tax on the sale of any real estate. This fee is typically paid by the seller, but could be negotiated between buyer and seller. Currently, the transfer tax rate in SC is $1.85 per $500 of the home’s assessed value.
• Estate Tax: South Carolina does not have an estate tax, however, the federal government may, depending on whether the value of the estate exceeds the exemption limit.
• Inheritance Tax: Only a handful of states impose an inheritance tax. Fortunately, South Carolina is not among them.
• Capital Gains Tax: If the value of your inherited property increases between the date of the previous owner’s death to the sale date, chances are you will have to pay capital gains taxes. (This is where the tax basis we mentioned comes into play.)

Other Expenses

• Repairs/Renovations: If you decide to invest in some updates to the home, whether it’s making a few minor repairs or major renovations, any and all expenses associated with those would be your responsibility.
• Ongoing Upkeep: The heir or beneficiary is also responsible for keeping all expenses current until the home officially sells. This includes mortgage payments, utilities, insurance, property taxes, and other ongoing maintenance costs.
• Real Estate Commissions: Typically, real estate agents are compensated through an agreed upon commission, which is a percentage of the sale price. The exact rate may vary slightly, and you might be able to negotiate, but the average in SC is 5-6%.
• Closing Costs: These fees cover all the administrative tasks associated with real estate transactions, such as attorneys’ fees, title insurance, loan origination fees, etc. In South Carolina, closing costs generally run around 8-10% of the sale price.

Documents Required for Selling Inherited Property in South Carolina

Before you can sell inherited property in South Carolina, you’ll need to gather and/or prepare the following documentation:

• Photo ID: First, you’ll need an up-to-date photo ID to verify your identity as the heir and seller.
• Proof of Ownership: This required document is usually provided to the new owner during the probate process.
• Death Certificate: Many of the parties involved with the sale of inherited property, such as the mortgage lender, will require a certified copy of the death certificate.
• Property Title Records: As mentioned, clear title is required to sell an inherited home in South Carolina. You will likely need to provide proof that the title is in your name, and that there are no liens, or other legal or financial encumbrances associated with the property.
• Property Tax Records: You may also be required to show proof that there are no municipal or other outstanding taxes associated with the home.
• Seller Disclosure: As mentioned, SC requires sellers to disclose in writing certain details about the property.

Options for Selling Inherited Property in South Carolina

There are several options for selling inherited property in South Carolina. The three most common include:

For Sale by Owner (FSBO)

As the home’s new owner, you have the right to sell it without hiring a realtor. There are a few pros and cons to this option.

Pros:

• Save money by avoiding real estate commissions
• Maintain much more control over the process

Cons:

• FSBO can be an overwhelming and confusing process
• Lack of experience and access to resources
• Potential mistakes can lead to legal and/or tax consequences

Real Estate Agent

Another option for selling an inherited home in SC is to work with a real estate agent. Of course, this option also comes with a few caveats.

Pros:

• Industry experience and access to exclusive resources
• Negotiation skills to get you a better sale price
• Help with documentation to ensure tax and legal compliance

Cons:

• Commission and other fees can start to add up, cutting into your profits
• Lack of control over the process
• Traditional home sales can take a long time, especially when it’s a buyer’s market

Real Estate Investor/Cash Buyer

The third option is to work sell to an investor who is willing to purchase the property for cash. Here are a few benefits and drawbacks to this option.

Pros:

• No real estate commissions and, in some cases, no closing costs
• Fast, headache-free transaction (close in as few as 7 days)
• Option to sell the property As-Is (no outlay of money for repairs/renovations)

Cons:

• Sale price may be slightly below the going market rate
• Not as much room to negotiate
• Risk of scams if not careful about choosing a reputable cash buyer

Challenges to Selling Inherited Property in South Carolina

Selling inherited property in South Carolina may not be as straightforward as it might initially seem—particularly if you find yourself dealing with one or more of the following scenarios.

Multiple Heirs

If you’re not the only heir or beneficiary, the process of selling can become even more complicated. It’s not uncommon for one or more siblings to refuse to sign probate or dig in their heels and refuse to agree to sell.

If this is the type of scenario you are dealing with, you can either choose to force the sale through a legal process known as a partition action. Keep in mind, though, that involving the courts can make an already stressful situation even more contentious.

Instead, your best bet would probably be to find a mediator who is experienced in dealing with disputes over inherited property. They can usually defuse the tension, facilitate productive negotiations, and help all parties come to an amicable resolution without having to go through a time-consuming and costly legal battle.

Title Issues

As discussed above, a home cannot be legally sold in the state of South Carolina without clear title. If the property you’ve inherited has a lien or overdue property taxes, for instance, you will need to address and settle those things before you can place the home up for sale.

If you are dealing with a particularly complex situation or you’re just not quite sure how to proceed, it may be worthwhile to consult with an experienced real estate attorney. Again, try to look for someone who has specific experience with cases involving inherited property.

Property in Disrepair

Another common issue that beneficiaries often face is that the inherited property is in severe disrepair. This is frequently the case when the decedent was elderly or in poor health prior to their death, and unable to keep up with the home’s maintenance.

In such a scenario, the inheritor must decide whether to spend the money required to fix the place up or sell it in its current condition. Most of the time, selling As-Is is the more practical choice, as it eliminates the need to invest additional time or money before the sale.

With the right cash buyer, you may even be able to sell the property without removing any of the belongings contained within. This is a particularly attractive option in hoarding situations or those in which the home is not habitable.

Avoiding Probate Court in South Carolina

In South Carolina, most inherited property is required to go through probate, which takes time and can be costly. Fortunately, there are a few ways to get around this, such as the following:

• Living Trust: A living trust allows your heirs to avoid probate for most assets, including real estate. Upon your death, the successor trustee will distribute the assets to the named beneficiaries without having to pass through probate court.
• Joint Ownership with Right of Survivorship (JTWROS):  If you co-own property, you can establish what’s known as a Joint Tenancy with Right of Survivorship (JTWROS). This legal arrangement ensures that the surviving owner will automatically inherit the deceased owner’s share, eliminating the need for probate.
• Gift the Property: In South Carolina, homeowners are allowed to transfer ownership of their property by gifting it to someone else. It’s important to note, however, that this type of transaction involves significant legal and tax implications, so do your research and seek professional advice before proceeding.

Most of these things must be set up prior to death. If you're in the process of planning your estate and considering one of these options to help your heirs avoid probate, we strongly recommend consulting with an experienced estate attorney or a qualified financial advisor for personalized guidance.