A frequently asked question relating to probate property is can it be sold during probate? And, like a lot of legal questions the answer depends on a few things including how the property is or was owned, and whether the deceased left a will.
Selling A House During Probate
If you are an executor or beneficiary faced with the task of selling a house that is part of a loved one's estate, navigating the probate process can feel overwhelming, especially when it comes to property matters.
In this article, we’ll explore what you can and can’t do when it comes to selling a property in probate, as well as highlight some key limitations and considerations if you find yourself in this position.
Can A Property Be Sold In Probate?
When a person dies they leave behind an estate. Usually, the deceased person will appoint an executor as part of their will. This is a person (or persons) responsible for valuing the estate, paying inheritance taxes and/or debts, and finally distributing assets to beneficiaries.
If a person dies without a will, property and other assets of the estate are distributed according to intestacy rules by an appointed administrator.
It’s important to know that generally, before a probate property can be sold at all, a named person needs to be legally given the authority to deal with the estate. This is called Grant of Probate if the person left a will (granted to the executor) or Grant of Letters of Administration if they died without a will (granted to an administrator).
It’s also important to know how the property is owned and, subsequently, who is set to inherit the property as per the law.
If A Property Is Owned By Joint Tenants
Joint tenants do not own a specific share of a property (i.e. 50/50). Rather, when one owner dies their share automatically passes to the surviving joint tenant. In these cases, a grant of probate isn’t required and the surviving joint tenant is free to sell the property if they wish. So, in these cases a property can be sold during probate, even before it.
If A Property Is Held In Trust
When a property is held in trust it means that it is held and managed by a trustee to benefit another person (the beneficiary). There are a whole host of reasons why a person might use a trust for their assets. If a property is held in trust a trustee can act on behalf of the beneficiary to sell the property providing the trust is valid without going through probate.
If The Property Is Held By Tenants in Common
Conversely, tenants in common own a specific share of the property. When one tenant in common dies, their share (regardless of size) does not automatically pass to the surviving owner. Rather, the deceased’s share is passed to whoever is named as a beneficiary in their will or in accordance with the Rules of Intestacy if there isn’t.
If the beneficiary who is set to inherit the property isn’t the surviving tenant in common, then a grant of probate or grant of letters of administration will generally be required before a property can be sold.
If A Property Is Solely Owned By The Deceased
If the property is solely owned by the deceased, then it will pass under their will or via the rules of intestacy if they didn’t make a will, or the will is deemed to be invalid. __In these cases, a Grant of Probate or Letters of Administration is required before a house can be sold. __
Limitations On Selling A House During Probate
If there is a valid will, executors have the authority to do the following while a house is still under probate:
Put the property up for sale
Conduct viewings
Agree on a sale price
But they cannot go as far as exchanging contracts and completing the sale.
An anticipated administrator cannot take any steps to put a property up for sale, market it, agree on a sale price or exchange contracts until they have been granted the authority to do so.
Furthermore, if the property is jointly owned, the co-owner's consent may be required before the sale can proceed.
Step by Step Guide To Selling A House During Probate
1. Valuation Of Estate
Before you can apply for probate and get a grant of probate, you must figure out how much the deceased's estate is valued at, this is called probate valuation of estate. This process involves identifying and valuing assets (like property and investments) and taking away the cost of outstanding debt to come to a total value of the estate.
When an estate has been valued you can then...
2. Calculate and pay Inheritance Tax
Estates have to pay inheritance tax if they meet a certain threshold. In most cases, certain forms must be filed relating to inheritance tax before applying for probate. Once these forms have been filed and the appropriate tax has been paid (if required), probate can then be applied for 25 days later.
3. Get Grant of Probate
As mentioned previously, grant of probate gives an executor or an administrator the authority to sell a property.
Once grant of probate has been obtained, the process of selling a probate property is really no different to selling a regular property except when it comes to completing the sale.
4. Put The Property on The Market
It is advisable to work closely with both an estate agent and a property solicitor at this point in the process. This is especially true if you aren't living in the property or you are considering carrying out renovations, as it's there are important factors to consider such as insurance.
4. Complete the Sale
Providing there are funds remaining from the sale of the property, these will be distributed to the beneficiaries.
Can I Put A Property Up For Sale During Probate?
Depending on the current market, you might be keen to get a property listed for sale sooner rather than later. In some cases, an executor can market a property before obtaining grant of probate, but an adminstrator cannot.
If you do list a property for sale before obtaining grant of probate, it's important to be up front about this with estate agents and potential buyers, because nothing is set in stone until the grant is obtained.
Common Mistakes To Avoid When Selling A House During Probate
While the process of selling a regular property vs selling a house during probate isn’t significantly different from a regular property sale apart from obtaining the Grant of Probate, it is important to be aware of common traps you could fall into during the process, like:
Not Getting The Right Legal Support
An experienced wills, trust and probate lawyer is indispensable in navigating the sale of probate property. They will help you understand what you can do at each stage of the probate process, who is responsible for what, and help you with any necessary paperwork required.
If you are an executor, there may also be other complexities involved that go beyond the property itself, including inheritance tax and paying off debts.
Getting legal advice on probate early in the process can help you do what needs to be done efficiently and in line with the law as it applies to your unique situation.
Selling Probate Property Without Authority
Only the legal owner of a property, or those who have been formally appointed through grant of probate or letters of administration, can oversee the sale of it. While you may be keen to get the ball rolling on selling a property, it’s important not to get ahead of yourself.
How long it takes to get a grant of probate can vary widely depending on a number of factors. Therefore, it’s important not to rush, as things could quickly go south if you don’t have the proper authorisation. This is particularly true when dealing with contentious probate matters where parties can’t come to an agreement. Doing something drastic that you don’t have the authority to do could intensify matters, not to mention work against you if the situation does escalate.
Mortgage Considerations
Generally when a mortgaged house is sold following grant of probate the outstanding mortgage balance is paid off from the proceeds of the sale. However, as we’ve mentioned, probate applications can take a long time depending on a number of things. Therefore, it’s important to consider mortgage payments during the probate process and while the house is up for sale.
In some cases, if you contact the mortgage provider and explain the situation they may suspend repayments until the estate is settled. However you approach this situation, it’s important to take action as if you inherit a property with a mortgage, you become responsible for meeting the mortgage repayments regardless of whether you live there or not.
Capital Gains Tax Implications
If you do sell a property following probate, a word of caution: if the property sells for more than its probate valuation, you might need to pay Capital Gains Tax on the difference (less any expenses and the estate’s annual tax-free allowance) within 60 days of completion.
If you anticipate this might be the case, selling the property on behalf of the Beneficiaries (known as Appropriation) might be more cost-effective. To do this you would need a document called a Deed of Appropriation.
Getting Legal Help When Selling A House In Probate
Selling a house in probate can be complex, but with the right guidance and understanding of the legal requirements, it can be successfully done the right way. And finding a solicitor to support you with probate property and estate matters can provide invaluable assistance throughout the process.
Are you currently facing the complex process of selling a house in probate?
Dealing with legal matters can be overwhelming, especially during such emotionally challenging times. At Lawhive we offer you accessible, affordable legal professional guidance and support to navigate probate property sales with confidence and ease.
To get started, tell us about your case and take the first step towards a successful probate property sale.