What to Expect When Selling Inherited Property

September 1, 2017

Selling an inherited property can be a minefield and will likely come at a time when the mourning process renders you emotionally and mentally exhausted. To help, First Avenue Property have outlined a few things to be mindful of before engaging with a lawyer for further information and essential legal advice.

 

Requesting an Updated Title Search

To see where things stand with the ownership of the property, you’ll need to start by requesting an updated title search. This will uncover any roadblocks to the sale like a notice of claim or a caveat, and whether the real estate is held in the deceased person’s name, or if it is jointly held by multiple people.

 

Property is Jointly Owned by Married Couple or a Trust

If the property is jointly owned by a trust or a married couple and there are surviving parties, a Transmission by Survivorship needs to be completed. While jointly held property isn’t considered part of the deceased’s estate, the transfer of ownership still needs to be done promptly after the death so things don’t become highly complicated should one of the surviving owners pass away.

A lawyer must complete an Application for Transmission (Survivorship) – which the surviving title holder needs to sign in front of a solicitor or person authorised to take a Statutory Declaration – and an Authority & Instruction (A&I) with a certified copy of the Death Certificate attached.

When the transmission is registered, the survivor(s) becomes the owner(s) and registered proprietor(s) on the title, and can sell the property.

 

Property Is Part of an Estate

The property forms part of an estate when it is held in the deceased’s sole name. To transfer or sell the property in this case, a Probate is needed if there is a Will, and Letters of Administration are needed if there is no Will.

An Application for Transmission (Personal Representative) and an A&I form can be completed by a lawyer once the High Court has issued a grant of the Letters of Administration or the Probate. When the transmission is registered, the property is put into the name of the estate and the title will show the property is held by the personal representative named within. Now the property can be sold or transferred to one or more beneficiaries.

 

Change of Ownership and House Insurance

Rates are easily forgotten, so your lawyer should send the local council a notice of change of ownership. They can make payment of these rates directly from any funds they are holding for the estate following closure of bank accounts.

It is also important to make contact with the property’s insurer, to keep the policy active and to keep them informed should the property be unoccupied. Your lawyer can take care of this. The insurance company may want to know who has authority to act for the estate – proof of which can be in the form of a copy of the Probate or Letters of Administration.

At the point of sale, the responsibility of cancelling the homeowner’s insurance lies with the estate, and a lawyer can be assigned the task.

 

Selling the Estate Property

Special clauses can be inserted into the Agreement for Sale and Purchase to reflect your position as having inherited the property and the fact that you may not necessarily be aware of any alterations or renovations that have been carried out.

The costs of any refurbishments, cleaning, renovations, valuation or classified listings involved in the sale can often be covered by funds the lawyers are holding for the estate, so don’t be worried that you’ll be on the hook for everything under the sun.

The solicitors involved with the sale can transfer the resulting proceeds to the estate administration file after the sale has been settled. The beneficiaries can then be paid their share when the estate funds are distributed.

 

Transferring the Property to Estate Beneficiaries

Things can get complicated if one or more of the estate beneficiaries want to take ownership as part of their entitlement from the estate.

Transferring the ownership to one or all of the beneficiaries of an estate is achieved easily with the creation and signing of A&I forms, as with the transmission.

However, things are more complicated when only one of multiple beneficiaries wants to take sole ownership of the Property as (part or all of) their entitlement from the estate. Because they may effectively have to “buy out” the other beneficiaries, this may require a registered valuation to help all parties arrive at an agreed value for the property. The lawyer will then complete a distribution statement showing what amount each beneficiary will receive. If the property is valued higher than the amount of inheritance that’s due to the person intending to take sole ownership, they will need to pay the difference to estate, which can be done via a mortgage if necessary, just as if they were purchasing the property in the usual way.

 

Seek Wise Counsel

While we hope this information has helped put your mind at ease, there are a lot of boxes to tick to stay within the law. As such we would love it if you let us help you sell your inherited property, but strongly recommend also seeking legal counsel to help you through the paperwork we’ve outlined above.

 

Photo credit - For Sale Sign and Family, Mark Moz

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Filed under Real Estate Investment

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