National Conveyancing Week: How to Sell a Probate Property
In celebration of National Conveyancing Week, Irwin Mitchell have written a series of articles aimed at supporting residential property buyers and sellers to understand some of the complexities of specific transactions.
If you are dealing with an estate in England & Wales you may find yourself responsible for the late person’s affairs, including being responsible for selling a property. This is known as a Probate sale.
What is Probate?
Solely owned property will require Probate before it can be sold. Probate is the legal right to deal with someone’s property, money and possessions when they die by way of Grant of Probate or Letters of Administration (if they died without a valid will) and includes organising their assets, paying debts and taxes, and distributing any remaining assets of their estate. If you are selling a property in Probate, it is important to be aware at an early stage that this could be a lengthy process.
Before applying for Probate, you must find out if you need to pay any Inheritance Tax. To do this you will need to obtain an estimate of the value of the deceased’s estate. A property valuation as at date of death will be necessary at an early stage. There are key timelines for completing any Inheritance Tax Forms which need to be submitted to HMRC and you should seek specialist advice from a Tax or Probate solicitor.
The property value for Probate is regarded as being its open market value as at the date of death, i.e. the value the property would reasonably have been expected to fetch on the open market if sold. This valuation must be a professional one and estate agents and surveyors would be able to assist you. Two or three valuations are usually obtained using professionals with a knowledge of the local property market in order to obtain an average valuation figure.
Once the estate has been valued and any relevant tax paid, Probate can be applied for.
Probate can be applied for online or by post, however, the estate administration process can be time consuming and complex and it is best to get professional support.
Do I need Probate?
Probate is required to sell property, which is solely owned by a deceased person, however, it may not be required to sell a property which is jointly owned and the co-owner is still alive.
If you are considering or need to sell jointly owned property, you are best advised to seek professional advice before putting the property on the market.
Marketing and Selling a Property in Probate
It is important to be aware that Probate can take on average between 4-5 months to be granted from submission of any application depending on the complexity of the estate. This will likely be key when deciding when to market a property with an estate agent.
Although there is nothing stopping you from putting the property on the market and accepting an offer before Probate is granted, you will not be able to complete on a sale until this time.
It is possible to exchange contracts and set a date for completion (conditional on Probate being granted if it hasn’t been granted already), however, this would be extremely unwise, and we would strongly advise against this. Without Probate you would have no legal authority to sell and this would put you in breach of contract.
If you do market a property before probate is granted, you should give your estate agent and any potential buyers a realistic timescale so that they are aware upfront that there could potentially be delays during the conveyancing process, to manage their expectations. If you think a property will sell quickly, it might be worth waiting until Probate has been granted to market the property to avoid any delays. Please also note you will have a legal obligation to the beneficiaries to ensure that you sell any property for its true market value.
We would recommend appointing a Solicitor as soon as a property is marketed for sale, to act on your behalf during the conveyancing process. This will allow them to check the title for the property if this is registered at the Land Registry or any deeds, if the property is not registered with the Land Registry, i.e. the property is unregistered.
If the property is unregistered, you will need to locate the original paper title deeds prior to a sale being agreed, as these deeds show the historic chain of ownership and demonstrate that the deceased was the legal owner of the property at the time of their death. These deeds are often held by the deceased’s solicitor, bank or they may have kept these at home.
This early check will allow your Solicitor to make you aware if there are any problems with the documents or any mortgages/restrictions that you may perhaps have been unaware of and can ensure any necessary steps are taken which will allow the legal process to flow smoothly once a buyer is found.
Other considerations for before and during a Probate Sale
You must ensure that any property you are selling is properly insured, advise any insurer that the property owner has now died and confirm if the property is now empty. You may need to pay more to cover insurance if the property is empty for longer than a month, however, it is important to declare this so as to not void any insurance which you have obtained should you need to make a claim.
The Local Authority should also be informed that the property owner has died as you may be able to claim a Council Tax exemption.
You may wish to make minor cosmetic alterations to the property, for example painting walls, in order to achieve the best price possible for the beneficiaries.
If you have never lived in the property, then your own personal knowledge of the property may be very limited. You should ensure this is reflected in any answers to any enquiries which are raised or forms which are completed during the conveyancing process.
Before exchange and completion, you will need to arrange for the furniture and belongings of the deceased to be cleared. You might want to consider doing this at an early stage as this could be quite a time-consuming process. This will help give you time to go through everything, arrange house clearance companies or furniture collection from local charities.
On the day of completion, you should obtain meter readings so you can inform the utility providers and close the deceased’s accounts.
Once a sale has completed, the proceeds of sale will need to be paid into a bank account in the names of all named executors, unless you have appointed a solicitor to administer the estate on your behalf in which case, they will handle any payments to beneficiates once the estate administration is finalised.
Overall, selling a probate property can be practically and emotionally difficult. It is important that you move at a pace you are comfortable with and speak openly about your concerns with your conveyancer and estate agent.
