Selling a Property During Probate: What Executors Need to Know

If you've been named as an executor in a Will – or if you've been appointed as an administrator for someone who died without leaving a valid Will – there's a fair chance you might find yourself responsible for selling property on behalf of the estate. 

Though this will be fairly similar to the process of selling property on your own behalf, there are certain rules about how transactions must be managed during probate. It's also important to be aware of some of the complications that might arise, and how best to deal with them if they do.

Securing the property

Before you can really think about putting a property on the market, it will be necessary to make sure it has been properly secured. 

It's advisable to ensure that:

• All doors and windows at the property have been checked.
• Any particularly valuable items have been removed and are being kept somewhere safe.
• Someone visits the property regularly to keep up any maintenance tasks.

You will also need to inform the insurance company that insures the building and contents that the property is empty. If you don't do this, any insurance policies might be invalidated, which means they may not pay out in the event of a claim. Insurers will often impose additional requirements where a property is left unoccupied, such as asking that someone inspects it at regular intervals or that the water supply is turned off or drained down, particularly over the winter months. It's important to read the policy carefully and comply with any such conditions, as failing to do so could leave the property uninsured. 

Valuing the property

Getting a valuation is obviously an important part of preparing a property for market, but it is also vital in terms of administering an estate and managing any potential tax liabilities. Even if you aren't planning to put the property on the market right away, it's really important to ensure you have the property professionally valued. This date of death valuation won't avoid capital gains tax, but it draws a line in the sand as to the property's value for probate. Because the value of an asset is uplifted to its market value on death, capital gains tax is only charged on any increase in value between the date of death and the eventual sale, rather than on the whole gain since the property was bought. 

Exactly what type of valuation you need will depend on the estate. Where inheritance tax is payable, a formal valuation from a RICS-qualified surveyor is usually necessary, as this is the figure HMRC will expect to see. Where there is no inheritance tax to pay, a market appraisal from an estate agent may be enough. If you aren't sure which applies, it's worth taking advice. 

Personal representatives have a duty to act in the best interests of the estate, which will usually mean selling at arm's length for the best price reasonably achievable. If a property is sold for less than its market value, the beneficiaries who lose out could potentially bring a claim against the personal representatives for the shortfall. It is sometimes possible to sell for less than market value, to a family member for example, but only where everyone entitled to the sale proceeds agrees. There can also be tax consequences on both sides, so it's important to take advice before going down that route. 

Clearing the property

In the majority of cases, it will be necessary to completely clear the property before a sale can be completed. Whether you choose to do this before or after the property goes on the market will be up to you, but the decision is likely to depend on:

• How many belongings there are to clear from the property.
• The state of the market.
• Your own timescales.
• How quickly you think the property is likely to sell. 
• Whether or not you decide to make any improvements to the property.

An estate agent can advise on whether it's worth clearing or staging the property before it goes on the market. If you're thinking about carrying out any work to the property before sale, it's worth getting professional advice on whether the time and expense are likely to be worthwhile, and on how any works would be funded from the estate. Doing a property up can seem appealing, but it won't always add enough value to justify the cost and the delay when you're already managing an estate. 

When can you put the property on the market?

There are no specific rules about when you can put a property on the market when you are selling on behalf of an estate. It is not necessary to wait until probate has been granted in order to start marketing the property or to accept an offer, but you will need to have a Grant of Probate or Letters of Administration in place before you can exchange contracts or complete the transaction. 

In theory, the executors of a Will have the right to act on behalf of the estate from the date of death rather than the date of probate being granted. In practice, though, the Grant of Probate must be in place before contracts can be exchanged, not just at completion. The conveyancing solicitor acting for the buyer doesn't strictly need to see the Grant before anything can happen, but it does need to be in hand to exchange, and the other formalities involved in the sale can usually be progressed while it is awaited. Because the Grant is needed to exchange, it's important to manage expectations and to tell the buyer's estate agent and solicitor early on that probate is still pending, so that the chain isn't unexpectedly held up. It's also worth being aware that estate agents are increasingly asking for more information to prove the right to market a property before they will list it. 

Unfortunately, waiting for probate to be granted can significantly hold up a transaction. With this in mind, you might want to carefully weigh up the benefits of putting a property on the market before probate is granted versus the chance of the transaction being significantly delayed or even falling through as a result of probate delays. 

When thinking about timescales, personal representatives may also need to consider whether any inheritance tax is likely to be due, and, if so, whether the proceeds of the property sale will be needed to pay it. If this is the case, the personal representatives will need to take the due date for the inheritance tax bill into account. It's worth noting that inheritance tax on land and property can usually be paid in instalments, spread over up to ten years, which may take some of the pressure off having to sell quickly in order to meet the bill. 

What if not everyone agrees about selling the property?

Of course, everything above implies that all parties are in agreement about selling the property. This will not always be the case. It's natural for people to have different ideas and wishes after a death, and there can be times when not all family members, personal representatives and/or beneficiaries will agree about selling a property. 

The personal representatives of an estate have a responsibility to carry out the terms of the Will (if there is one). If there are no clear instructions left in a Will to determine what should happen to any property belonging to the estate, the personal representatives will need to make a decision about what action is in the best interest of the estate. 

Though personal representatives should always seek to keep beneficiaries informed of their actions and take their wishes into account, it's worth noting that it is the personal representatives who have the final say here, not the beneficiaries. However, if at all possible, we would always advise seeking agreement from all parties before going ahead with any major sales. 

If an agreement about the best course of action cannot be reached, we'd recommend seeking support from a solicitor as soon as possible. A specialist probate team such as ourselves will be able to advise on the legal position and help to mediate between all parties. In the event that an agreement cannot be reached, we'll be able to advise on any further legal recourse that might be relevant, such as the possibility of beneficiaries raising a challenge with the Probate Court. 

Getting support during the process

If you are responsible for selling a property on behalf of an estate, please know that there is support available. Our experienced solicitors are on hand to help you successfully navigate the process of managing the transaction and ensure you are meeting all your responsibilities to the estate. Please don't hesitate to get in touch if you need support.

 

FAQS

Do you need a Grant of Probate to sell property on behalf of an estate?

It will be almost certainly be necessary to have a Grant of Probate or Letters of Administration in order to prove that the personal representatives have the right to sell property on behalf of the estate. The Grant will need to be in place before contracts can be exchanged, although the other formalities involved in the sale can often be progressed while it is awaited.

What if not everyone agrees about selling a property on behalf of an estate?

Ideally, all relevant parties will agree about selling the property. However, this won't always be the case. The personal representatives do not need to have the agreement of all beneficiaries in order to go ahead with a sale, but they do need to be sure they are acting in accordance of the terms of the Will and/or in the best interests of the estate as a whole. 

When is the right time to put a probate property on the market?

The right time to put a property on the market on behalf of an estate will depend on a number of factors. This will include: whether you are waiting for a Grant of Probate/Letters of Administration, how much work will be necessary to clear the property and ready it for sale, and whether or not the proceeds of the sale are needed to pay an inheritance tax bill. Selling a property on behalf of an estate can also be emotional, and many personal representatives will wish to take this into account. 

Why do you need to obtain a date of death valuation for property belonging to an estate? 

It is important to ensure you have obtained a professional valuation for property belonging to an estate for two reasons. Firstly, because this helps ensure the personal representatives are fulfilling their responsibility to sell the property for market value. And secondly, a date of death valuation is important for tax purposes. It doesn't remove capital gains tax, but it establishes the property's value at the date of death. As assets are uplifted to their market value on death, capital gains tax is only payable on any increase in value between the date of death and the sale, rather than on the whole gain.