What happens in the unfortunate event that a property owner dies? The law adequately takes care of such instances by allowing the property to be sold under probate. You may be in a dilemma where you want to sell a house before probate is granted. Is this a possibility you can pursue? Well, this article offers insight into whether or not you can sell a house before probate.
What is probate?
When a person dies, the administration of their property must be done according to the deceased’s will. In cases where the deceased had no will, the government has the mandate to determine the beneficiaries of the deceased’s estate.
In most cases, the deceased’s assets will be the property/estate they owned including their main residence. The idea of disposing of property is what often leaves executors of the will with much thought. This calls for them to obtain permission to legally wind up the deceased’s estate. This is where probate comes in.
Probate refers to the process of making sure that the terms of the will are executed as indicated in the will. It is the official legal document that executors of the will require to wind up the estate of the deceased. This document is usually issued to executors whose names appear in the will or close family members in the case where there is no will. It serves as a confirmation of their legitimacy to administer the estate.
It may be referred to as Grant of Probate where the deceased had a will or Grant of Letters of Administration where there was no will.
What does Selling Property that Needs Probate Entail?
As an executor of a Will and having Grant of Letters of Administration, you have the responsibility of managing the estate of the deceased efficiently. You may have to liquidate the assets before distributing the assets according to the will or in some cases pay up inheritance tax that may be due.
This means you first need to establish the value of the property before calculating the value of the estate for Inheritance Tax Purposes, therefore, it makes sense to get the property on the market even before being granted probate. Here, you can engage a qualified estate agent to give you a valuation of the property. The Revenue Office recommends that you obtain at least three valuation reports. Make sure you inform the estate agent that the property is in a probate sale as this helps to manage the expectations of potential buyers.
The value of the property will often for a significant part of the worth of the deceased’s entire estate that includes investments, cash, contents from the property and insurance. Before anything else, it is important to establish if the deceased has any outstanding debts that are also referred to as liabilities. This includes utility bills, the funeral account as well as Council Tax and any other sums owed to friends or family members. These (liabilities) will be deducted from the worth of the assets held. It is then that a determination can be made on whether any Inheritance Tax is payable. This forms part of the overall process of applying for a grant hence the need to ensure the accuracy of all the figures that are provided.
In some cases, you will have to do some work on the property before putting it up on the market. It could be that the property needs good airing and cleaning, planting some flowers to brighten it up or giving it a new coat of paint. All these efforts will ensure that you fetch the best price.
Once you are ready, you must engage a conveyancing solicitor to carry on with the sale of the property. Make sure they know that they are dealing with a Probate sale just so that they are aware. When you finally obtain the Grant of Probate, you can go ahead and exchange contracts. At this point, the buyer is legally bound to purchase the property. This means that you have secured a sale. In the buyer pulls out, they will incur a fee.
Can you sell a house before being granted probate?
The answer to this question is yes, you can. Probate is needed in cases where the deceased was the sole owner of the property. If you need to sell property in such a situation, you can go ahead and list it on the market and even accept offers before obtaining the Grant of Probate. However, you can’t complete the sale until you receive the probate.
There are unique circumstances where the property may be soled without probate. For instance, if the deceased had a partner or spouse with whom they jointly owned the property and whose name appears on the title deeds, then the property may be sold off if the surviving partner would like it to be disposed of.
If the deceased was a tenant in common with another person with separate percentage shares, the property will be part of their estate. Consequently, it has to be passed on to those that are entitled to inherit as per the Will or Rules of Intestacy in cases where there was no Will. In this case, probate will be needed.
In cases where the deceased was a joint tenant hence neither person owned a specific share of the property, neither is probate required not the property sold. Instead, the property is automatically transferred to the surviving owner.
While some executors go ahead and exchange contracts in the absence of the Grant of Probate, this is not right hence a rare practice. Contracts should be exchanged only after obtaining probate. The only time executors can exchange contracts without probate is if they are sure the Grant of Probate will be issued in time for completion. Even then, this option too is considered to be high risk.
What are the challenges of selling a house before probate?
Selling a property that is under probate can sometimes be challenging because of the following reasons:
- As explained in the process of selling probate property above, it has the potential of creating a financial problem because you will need to first pay Inheritance Tax (where applicable), probate fees, maintenance costs along with other out of pocket expenses before obtaining probate after which you can reclaim these costs from the estate.
- The whole process involves so much bureaucracy than would a normal property sale.
- It can be a problem having to maintain probate property before and after the grant of probate.
The process of selling a house that is under probate is usually different from the normal house sale process. Not only will you need to have the Grant of Probate (depending on the circumstances) but also have to bear with the lengthy duration it may take before you dispose of the property. This is because the process of granting probate could go on for between 12 and 14 weeks which may be followed by another couple of months for the sale process to go through. Once you complete the process, you can sell through an estate agent in the normal way or opt for a property auction. The other alternative would be to sell the property to a cash buyer.