With 25 years experience in real estate sales, undertaking the sale of a deceased estate property is handled in the “exact same way” as any other real estate transaction, with a few exceptions. It can be a particularly sad and stressful time for the family but I work closely with the executor and family with the highest degree of sensitivity and respect.
While there are legal issues to consider, the executor of the Will essentially becomes the vendor if they sell the property. They normally get a formal valuation and then engage a real estate agent to manage the sale, like any other seller would.
The laws and processes for selling an inherited property can change depending on the state the property is located.
Before you attempt to sell the property, make sure you’ve looked into the legal requirements:
For further information visit Western Australia Government - how to manage a deceased estate.
As part of the process, an executor – or personal representative – can help you with protecting (or selling) a deceased person’s property. They should make sure that all taxes and debts have been paid off, and that all entitlements have been transferred to the right people owed.
You – and your executor – will need to keep in mind that:
2. Transparency about the property cost and valuation is key
You also need to make sure that your executor gets multiple appraisals of the property from real estate agents.
3. Sale by auction might be a better choice
If the property has multiple beneficiaries, it could be wise to sell the property quickly and transparently and confirm the payment of the will.
4. Transfer of ownership needs to be organised
Unless the title has been transferred from the deceased to the joint tenant, executor, or personal representative, the property can’t be sold – or transferred to the purchased.
5. Can you sell a house while going through probate?
In Australia, you need a grant of probate – or grant of letters of administration – before a house can be sold. A grant of probate is a legal document that gives an executor authority to deal with the estate of the deceased according to their will.
The exception to needing a grant of probate is you hold a property as joint tenants (for example, when you’re part of a couple with assets in both names). An executor might still enter into a sale contract before a grant of probate is issued, but a Will can’t be administered – and settlement can’t happen – until after a probate has been received. The transfer of property requires a “grant of probate”, which an executor applies for from the Supreme Court. It usually takes at least four weeks to get. Using a lawyer isn’t mandatory, but the process is easier and quicker if done by an experienced practitioner.
To get a grant of probate there is a mandatory advertising period, during which the lawyer will get all the needed documents ready and then after 14 days, they are filed. If all are in order, it takes about two weeks to come through. It can be longer, but two weeks is common.
The executor is empowered under the effect of the Will and must sell in accordance with any specific instructions in the Will.
With multiple beneficiaries often named in a Will, an auction is a popular sale method for deceased estates. An auction is an open and transparent process, where all parties involved can witness the negotiation, which is why it’s often used for deceased estates. A property can be sold “subject to a grant of probate’’, which is noted on the contract.
Executors are normally allowed up to a year to wind up and distribute an estate. There can be capital gains tax implications if settlement happens more than two years after death. So it’s best that an executor applies for probate as soon as possible.
6. Tricks and traps executors need to be aware of
Depending on the size of the estate, and the age of the executor, there will need to be a final tax return for the deceased from the beginning of the financial year to the date of death, and then possibly an estate return covering from the date of death to the end of the financial year.
There may be more returns, depending on the size of the estate and the terms of the Will. Complicated Wills can require more than one return if there are ongoing testamentary trusts.
The executors must proceed in the same manner as any other vendor, giving the same level of disclosure to purchasers as a normal vendor.
Selecting an experienced and empathetic real estate agent is key.
Often, as an agent, sale at auction is a source of great joy, but a deceased estate is very different. The executor and any beneficiaries need to steel themselves for when the property is actually sold, as it’s often the final disconnect for those people from the person who has died. It can be highly emotional, so I bring as an agent strong levels of empathy, who can get the right outcome, but also understand it can be a very difficult time.
It’s also wise to look out for other factors that may complicate the process, such as:
7. Transferring assets to beneficiaries
Do assets need to be sold within the estate or transferred to beneficiaries in-specie (that is, transferred without selling any primary investments)? Selling assets during the estate’s administration could take care of any capital gains or tax losses if you decide not to transfer to the beneficiaries.
8. Claims against the estate
In a situation where family members might be treated differently in the Will, or inheritance and provision claims are made, an executor will have to become involved in all litigation among family members.
9. Superannuation
An executor is responsible for maximising the overall value of the estate. This means an application has to be made to the superfund that any accounts – which are not subject to a binding death benefit nomination – are paid into the estate.
10. Family trusts and private companies
The executor may need to take on the role of a deceased trustee of a family trust, the role of the appointer of the family trust, or be appointed as a director of the private family company. This leads to different obligations when they took on the role as an executor.
11. Withdrawing from responsibilities
The only way to remove an executor is for the grant of probate to be revoked and a new executor appointed. This can be a difficult process. Generally, it’s best practice for anyone appointed as executor to renounce their role before starting if they don’t think they’ll be able to fulfill their responsibilities.
The executor has to make sure they follow the correct processes to make sure that a deceased estate property is sold.
12. What’s the process of selling a deceased estate?
The process of selling a deceased estate involves a few steps but most things are pretty straightforward. Here we take you through the general process. As things vary from state to state, make sure you read through the specific information for your area too.
1. Preparing the paperwork
To begin the process, the executor applies for a grant of probate. Alternatively, a beneficiary can apply for a grant of letters of administration.
The executor then applies to have the title changed from the name(s) of the deceased to their own name.
2. Preparing the house of sale
The executor collects multiple quotes for any costs related to selling the property. This can include agents – as well as contractors – when there are repairs to be done.
The executor then prepares the house for sale. They also work with the agent to list the property for sale.
The executor should aim to maintain transparency, keeping beneficiaries informed throughout the process.
3. Once the property is sold
When the property is sold, the executor distributes the funds to the beneficiaries, according to what’s outlined in the will.
How long do you have to sell a house after someone dies?
While there is not set time when you have to sell a house after someone dies, most are sold no sooner than six months and before nine to 12 months.
According to the ATO, it can impact taxes depending on when you sell. You can be exempt from capital gains tax (CGT) on disposal of an inherited dwelling if you dispose of it within two years of the person’s death and either the deceased acquired the property before September 1985 or at death the property was the main residence of the deceased and was not being rented.
If you dispose of the property outside of the two-year period, the exemption can still apply if the Commissioner of Taxation grants an extension of the two-year period.
If you need advice for a deceased estate or divorce sale, Claude Iaconi has extensive experience in these matters and will provide confidential advice with sensitivity and respect. Claude can be contacted on 0412 427 877 or claude@edisonproperty.com.au
DISCLAIMER: The advice contained above is informational and general in nature and all parties should not rely on the above but seek legal advice appropriate to their circumstances.