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Effect of Escheat

Escheat is the process by which a real property is reversed to a state if no individuals exist to claim or inherit such property.  Escheat signifies a falling of decedent’s estate into the general property of the state on his/her death, intestate, or if s/he dies without lawful heirs[i].  Escheat is commonly applied to the transfer of title to a person’s property to the state when the person dies intestate without any other person capable of taking the property as heir.

However, once an escheat is established, then the state is vested with title to the property.  The title which the state receives pursuant to a decree of escheat is by the statute made subject to the expenses of administration which will accrue after the death of the prior owner[ii]. If a state statute specifies a period of time within which a claim to escheated property can be made, the state holds the property until the statutory time expires.

If the property of a decedent is taken by escheat by the state because of defect of heirs after the death of the decedent, then the state takes such property subject to the lien of taxes duly assessed prior to the death of the decedent.  The state is liable for all the liens and encumbrances and also the debts of a former owner that existed at the time of escheat from the former owner.

It is to be noted that neither entry upon the land nor the judgment of a court is necessary to consummate the title of an estate under an escheat[iii].  There are statutes that protect the rights of a creditor by permitting them to enforce their claims against the property in the hands of the state[iv].

[i] In re Estate of Clark, 271 A.D. 691 (N.Y. App. Div. 1947).

[ii] In re Estate of Graley, 183 Wash. 268 (Wash. 1935).

[iii] In re Ohlsen’s Estate, 158 Ore. 197 (Or. 1938).

[iv] Puyoulet v. Gehrke, 143 La. 315 (La. 1918).

Inside Effect of Escheat