Selling a house after a relative has died
It’s something most of us don’t want to think about but will eventually have to do after our elderly parents die.
When a relative dies it’s always tough for the family. Not only do they have to cope with a tidal wave of grief but there are also lots of practical things to sort out, such as selling their relative’s home.
A deceased person’s will should name the individual or individuals they want to deal with their money and property, also known as their estate. They are the executors who are responsible for collecting and valuing the assets, paying off any debts and Inheritance tax that is due and distributing the estate in accordance with the will. Unless the beneficiaries wish to have the property transferred into their names, the property will need to be sold.
Probate – what is it and how to get it?
If the deceased relative was the sole owner, then a grant of probate is required before the property can be sold. This is a certificate issued by the court that confirms the validity of the will and names the person(s) who has the legal authority to deal with a deceased person’s possessions, including their home.
If you’re an executor you can appy for probate yourself or use a solicitor or another person licensed to provide probate services.
It’s possible to apply for probate online or by post to your local Probate Registry. Documents required include the death certificate and the original signed will plus any additions to it. See this Government website for more details https://www.gov.uk/wills-probate-inheritance/applying-for-a-grant-of-rep...
It’s necessary to estimate the estate’s value, including any property, before applying for probate. It is recommended that you obtain two or three estate agent valuations. A return of estate information form has to be filled in detailing all the deceased’s assets and liabilities as part of the application for the grant. Depending on the value, it may be necessary to pay inheritance tax.
The person named on the grant of probate has a legal responsibility to sell the property for the open market value. If the property is sold for less, a beneficiary can require the person named to make up the difference. So your elderly parent’s home shouldn’t be sold to a relative, such as a grandchild, for a knockdown price no matter how much you might want to help him or her get a foot on the property ladder. It will leave other beneficiaries out of pocket and you might have to stump up if you’re executor.
Check title and locate deeds
At this stage it’s vital to check who actually owns the property. If the property is registered with Land Registry, it’s a straightforward process to make sure the legal title is in your deceased relative’s name and a plan showing the full extent of the property. See HM Land Registry website for more details. However the property may not be registered if your relative owned it before 1990 and it hasn’t been mortgaged since. If it’s unregistered, you will need to locate the paper title deeds to prove ownership. Be very careful when clearing out a property. If in doubt about any documents keep them safe.
Can I sell the property before I get probate?
The short answer is no. It’s possible to put the property on the market before the grant of probate is issued. However the grant must be obtained before contracts can be exchanged or forms filled out to transfer the property’s title via the Land Registry. The property will also need to be cleared of all its contents before it can be sold – so be realistic about timescales.
Unoccupied home Insurance
Most insurance policies contain a clause about what happens to a property when it is left empty. You should contact the insurance provider to update them on the situation and discuss the options available, including taking out an entirely new policy. Insurance providers say an empty house is at greater risk than an occupied one. For example, a minor leak may develop into a major flood if there is no one to spot it in time. It’s also more at risk from vandals and burglars. The executor or executors have a duty to safeguard the assets of the estate, including the property. It’s also essential to make sure the property is secure. If a number of people had keys, consider changing the locks.
What about tax?
Inheritance tax is a tax on the money and property of someone who has died if it’s worth more than £325,000. The rate is 40% of the estate that is above this threshold. It needs to be paid before the deceased’s estate is distributed to the heirs. You have to inform HM Revenue and Custom (HMRC) of the death in case inheritance tax is due. Capital gains tax is another issue excecutors need to be aware of. If the property is not sold for some time and its value has risen above the price estimated when applying for probate, there may be Capital Gains Tax to pay.
You can hire a professional, such as a solicitor, to help with some or all of the tasks involved in selling the property of a deceased relative, including checking the title and tax issues. The Gov.UK website has a useful checklist of what to do when someone dies. You can find this online at www.gov.uk