Can an executor sell property?
Probate property is most commonly used to refer to land or buildings where a registered owner is deceased. The “probate” in probate property refers to the requirement of a grant of probate in order to sell or transfer the property because there is a deceased owner.
Why does a deceased person’s property require probate?
Significant assets in a deceased’s sole name, in the majority of cases, will require probate. Therefore, it is necessary for a house to go to probate before it can be sold or inherited. This results in a change of ownership being registered at the Land Registry. Probate property can mean that the property is part of an estate that is going through the process of obtaining a grant of probate. Probate has two main functions;
1) To provide HMRC with an understanding of what the deceased’s estate is made up of and its value for inheritance tax purposes. As property is often the most expensive asset that a person owns, it is also the main contributor to an estates inheritance tax liability. Sometimes the value of the property alone is enough to incur inheritance tax. Therefore, HMRC requires an Inheritance tax form to be completed during the probate application. This is so they can be sure there is no tax to pay on the estate or that they are receiving the correct amount in tax.
2) To protect the assets of the deceased. Institutions holding assets on behalf of the deceased have a duty to protect them. For that reason they will not release assets to anyone without proof they are entitled to handle the assets. In the case of a property, it is HM land registry that is responsible for ensuring the deceased’s property is not mishandled. A grant of probate is used to prove that the person attempting to sell or transfer the property has the legal authority to do so.
When can a probate property be sold?
Probate property can be sold at any point after a grant of probate has been obtained. It can take months to find a buyer so probate properties are often put up for sale during the probate process. A house can be “sold” during probate but the sale can only be completed after a grant of probate has been issued. This means the probate property can be marketed, a buyer found and a sale agreed. However, the exchange of contracts and transfer to the new owner cannot be completed until there is a grant of probate.
Beneficiaries may choose to sell the inherited property after the administration is complete. In this case, the property would be transferred into the beneficiaries names during the estate administration. This removes the executor’s right and responsibility to sell the probate property and distribute its proceeds. The beneficiaries are then free to sell the property whenever they are ready and split the proceeds amongst themselves.
How does a probate sale work?
A probate sale works exactly like any other house sale except for the requirement of a grant of probate. The property is marketed, a buyer secured and a sale agreed. The property will then go through the conveyancing process which is when a grant of probate is required. Conveyancing is the administrative legal work involved in ensuring a valid sale or purchase of a property. The sale of a probate property can not be considered valid without a grant of probate proving the executor’s legal authority to sell the property. Once a grant of probate has been obtained the probate property can go through conveyancing.
Can an executor sell property in the deceased’s estate?
This is dependent on how the property is owned. A property can be held in 3 ways. 1) the deceased’s sole name which means they are the only owner of the property. 2) In Joint names with another person which means all owners have an equal right to the property. 3) In tenants in common which means there are multiple owners who own a specific share of the property.
Probate property owned in the deceased’s sole name
An executor can sell the property alone if it is in the deceased’s sole name. Selling a deceased’s property owned in their sole name will require probate. Only an executor can sell a property in probate. The executor of a Will is chosen by the deceased and is the only person with the right to handle the deceased’s assets. A grant of probate will only be issued to the executor named in the Will. The grant of probate confirms the executor’s legal authority to handle the estate’s affairs, this includes selling the property if necessary.
Property owned in joint names
A surviving owner can sell an inherited property before probate if the property was inherited through joint names and not through the Will. A property owned in joint names passes through “the rights of survivorship” which dictates the surviving owner is the inheritor of the property. The property will not require probate to be sold or transferred because the property does not fall under the deceased’s estate. As the property does not enter the deceased’s estate, the executor cannot sell it. The surviving owner will become the sole owner and they can do as they wish with the property.
Probate property owned as tenants in common
If the property is owned as tenants in common it can be a little more complicated. When there is a surviving owner, an executor or heir cannot force the sale of the whole property. A sale will require all to agree, not just a majority. The executor will need to consult with the surviving owner and the beneficiaries to decide how they want to handle the property. If everyone is in agreement to sell the property, the executor and surviving owner would sell the property together.
If the deceased’s share of the property is transferred to a beneficiary they become the owner. A beneficiary can come to an agreement with the surviving owner themselves. A beneficiary can sell their share of an inherited property owned as tenants in common. However, if they wanted to sell a share of the property on the open market it would be difficult as there would probably be no interest. It would also be extremely difficult without agreement from the other owner/owners. Any interest would probably come from one of the other beneficiaries, for example, a sibling or siblings. Another owner may want to purchase an additional part of the property to add to what they already own.
Can an executor sell the property without all beneficiaries approving?
An executor can sell the property without all the beneficiaries approval. There are not any specific provisions in a Will that allow beneficiaries to decide or approve how the assets are administered. It is the responsibility of the executor to administer the assets with the estate and its beneficiaries best interests in mind. However, an executor should consult with beneficiaries about how they would like to inherit their share of the estate. Open communication and joint decision making can help avoid disputes with beneficiaries. In turn, the estate administration will be smoother and usually quicker.
A testator may add a specific clause in their Will which states they would like the beneficiaries to decide how they want to inherit the property. In this case, the executor should consult the beneficiaries as to whether they want to keep the property and have shared ownership or sell the property and receive the proceeds. However, if the beneficiaries cannot agree then the executor is ultimately responsible for making the decision. The executor may decide it is within the best interests of the estate to sell the property even if one or more of the beneficiaries disagree.
Can an executor agree a sale price without all beneficiaries agreeing?
An executor can accept an offer for a probate property without obtaining agreement from the beneficiaries. Executors are autonomous and have the overall authority when making decisions about the administration of the estate. However, an executor should consult the beneficiaries about decisions that can affect their inheritance. An executor is not under any obligation to take instructions from beneficiaries but they do have an overriding duty to act in their best interests. Therefore it is the duty of the executor to ensure that the property is sold at the proper market value.
An executor should not take actions for personal gain or allow personal feelings to affect their decisions. If an executor was to sell a property for less than a reasonable value they could be seen to have failed in their duty. A beneficiary can not stop the sale of a property but they can hold an executor personally and financially liable if there is a loss to their inheritance.