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Detailed Answer — Court authorization to sell real property and pay the mortgage (South Dakota)

If real property is owned by an estate, a ward, a conservatorship, or is otherwise subject to court supervision in South Dakota, you normally must obtain a court order authorizing the sale before you can close and apply proceeds to the mortgage. The basic steps below explain the typical process, the documentation you will need, and practical issues to expect.

Step 1 — Identify who has authority to act

• Determine the legal role: personal representative (executor or administrator) for a decedent’s estate, conservator/guardian for an incapacitated person, or a court-appointed trustee/receiver. If someone holds a valid durable power of attorney that explicitly authorizes real estate transactions, a court order may not be required; check the document and statute or ask a lawyer.
• If no one has authority, a petition to open probate or to appoint a conservator/guardian is usually the first step.

Step 2 — Gather required documents

• Death certificate and will (if probate).
• Current deed and title information.
• Mortgage payoff statement from the lender (payoff amount and expiration date).
• Purchase contract or written terms of proposed sale.
• Recent appraisal or broker price opinion to support the sale price.

Step 3 — File a petition or motion with the probate/circuit court

You will typically file a formal petition or motion asking the court to authorize the sale of the property. The filing is made in the county where the estate or the protected person is being administered. The petition normally includes:

• Identification of the parties (personal representative, heirs, beneficiaries, creditors, mortgagee).
• Legal description of the property.
• Proposed sale terms (price, buyer identity, closing date, commissions, proposed allocation of sale proceeds including mortgage payoff).
• Evidence of efforts to determine value (appraisal or comparable sales).
• A request for an order authorizing the sale and approving terms and distribution of proceeds.

Step 4 — Provide notice and attend the hearing

South Dakota procedure requires notice to interested parties (heirs, beneficiaries, and creditors) and may require publication. The court will set a hearing. At the hearing the judge will review whether the sale is fair, the sale price is reasonable, and that creditors (including the mortgagee) and interested parties are appropriately protected.

Step 5 — Court order and conditions

If the court approves the sale, it will issue an order authorizing the personal representative or conservator to sell the property and specifying how proceeds will be applied. Typical conditions include:

• Authority to execute deed and closing documents.
• Direction to pay off the mortgage and other liens at closing.
• Requirement to file an accounting or return to the court after closing showing payoff and distribution of remaining funds.
• Possible requirement of a bond or other protections if the court deems it necessary.

Step 6 — Closing, payoff, and recording

• Coordinate with the lender early to obtain a firm payoff statement showing exact amount to satisfy the mortgage at closing and any required lender documents (e.g., payoff instruction or lien release).
• Close the transaction under the court’s order. The title company or closing attorney typically disburses funds to the mortgagee and records the deed and mortgage release.
• File a closing statement or account with the probate or guardianship court showing how sale proceeds were applied and how remaining funds are distributed to creditors, heirs, or the protected person.

Key statutory references and where to look

South Dakota’s probate and guardianship rules and statutes govern these procedures. For an overview of South Dakota codified laws and relevant chapters on probate and related matters, see the South Dakota Codified Laws: https://sdlegislature.gov/Statutes/Codified_Laws/. For local court procedures and probate/guardianship forms, consult the South Dakota Unified Judicial System website: https://ujs.sd.gov/. Because forms, local rules, and required notices vary by county and by the type of proceeding, check the county circuit court clerk’s office or the UJS site for county-specific guidance.

Common variations and special situations

• If the personal representative has explicit authority in the will to sell real property, some courts permit sale with minimal court supervision, but filing and notice requirements still often apply.
• If the estate qualifies as a small estate under state law, simplified procedures may allow transfer or sale without full administration — check local rules or consult an attorney.
• If the property is underwater (sale price less than mortgage balance), the lender may agree to a short sale but will usually require a separate approval process with the lender in addition to the court’s authorization.
• If there is an active foreclosure or trustee sale, timing and priorities change; talk to counsel promptly to coordinate the sale and protect the estate’s interests.

Hypothetical example (illustrative)

Suppose a person is appointed personal representative in a South Dakota probate opened in Pennington County. The house has a mortgage balance of $120,000 and a purchase contract for $160,000. The personal representative files a petition asking the circuit court to authorize the sale, attaches a recent appraisal and the purchase contract, gives notice to heirs and creditors, and appears at the hearing. The court issues an order authorizing the sale, directing the closing attorney to pay the mortgage from sale proceeds and to file an accounting afterward. At closing the mortgage is paid off, the deed is recorded in the purchaser’s name, and the personal representative files a final report with the court showing payoff documentation and distributing the net proceeds to the estate’s bank account for later distribution to beneficiaries.

Helpful Hints

• Contact the mortgage lender early to get a payoff statement with an expiration date — payoffs can change daily because of interest and fees.
• Secure a current appraisal or broker price opinion before filing your petition to support the sale price and avoid delays at the hearing.
• Start the probate or guardianship paperwork promptly — court timelines and notice periods can add weeks to the process.
• Work with a title company or closing attorney experienced in probate/guardian sales — they will help handle lien payoffs, recording, and closing statements that the court will want to see.
• Keep clear records: copies of the court order, closing statement, payoff statement, and recorded deed will be needed for the court file and for distribution accounting.
• If the situation seems contested (disputes among heirs, claims by creditors, or unknown liens), hire a licensed South Dakota probate attorney to avoid mistakes that can lead to personal liability for the representative or conservator.
• Remember possible taxes: sale of estate property can have tax consequences. Consult an accountant or tax attorney about estate and capital gains issues.