The A-Z of Selling a Probate PropertyJames Trafford
Selling a probate property is more complicated than selling a regular property, and there are several legal implications you need to be aware of. When loved ones have passed away, we are left in emotional turmoil with a deep sense of loss, and so having basic knowledge of what’s involved and what’s required of you will help the process go smoothly and without upset.
What is a property under probate?
When someone has passed away, the estate that they leave behind is managed by a legal process called probate. What constitutes the estate involves anything left behind that belonged to the deceased, and this often includes properties like houses. The probate process, however, involves the entire estate and includes many other things like land, investments, vehicles, and money.
Not everyone is eligible to apply for probate, and this is determined by whether the deceased has left a will or not. In situations where the deceased has a surviving spouse and their estate was co-owned together, probate may not be necessary as the surviving spouse would inherit the property automatically. In his scenario, the property would still have to be transferred into the sole name of the surviving spouse, and this would require a solicitor to handle all the legal and paperwork aspects of the transfer.
However, where the deceased had solely owned the property, probate would typically be needed in order for ownership to be transferred to the beneficiary, or before it was sold, and the proceeds transferred to the beneficiary. Where property is held in joint names, husbands, wives, and partners are usually able to sell the property without the Grant of Probate being required. A Grant of Probate is a legal document that is sealed by the Probate Registry and states that the will is valid and that the person holding probate is legally allowed to settle the estate on the deceased’s behalf.
The starting place to discern what documentation would be required is the title deeds documented at the UK Land Registry.
Selling a probate property
Before a property under probate can legally be sold, there are several steps that are required to be taken first.
Step 1: Make sure the property is secure. Properties are often left empty during the probate process, and so they will need to be secured, such as removing all belongings, locking doors and windows, and making sure nothing is left turned on that could cause a fire hazard. It’s also advisable to check the insurance cover status of the property and especially make sure that the policy hasn’t automatically been terminated when the owner passes away.
Step 2: Communicate with the appropriate people and organisations. The home insurance provider has already been mentioned, but there are others that need to be contacted, such as the deceased’s local council. This particularity may prove useful in that some councils offer a lower council tax bill when someone has died, and the property is temporarily left empty.
In addition to the above, you will have to contact utility providers like water, electricity, gas, and internet/phone providers for the property.
Step 3: obtain a property valuation. To obtain a probate property valuation, you will need to hire the services of a certified chartered surveyor. Shop around for the right surveyor and be sure to check that they have the relevant experience in selling and dealing with properties under probate and are fully versed in inherent tax.
Whatever valuation is provided, it is possible that it will be scrutinised by the HMRC’s District Valuer Services (DVS).However, for evaluations provided by a certified RICS Chartered Surveyor, the HMRC is more likely to accept their evaluation without question.
Step 4: Pay the inheritance tax that is owed. Inheritance tax is typically paid by the estate of the deceased person. Whether or not inheritance tax will be levied against the estate will depend on several factors, and so the person responsible for handling the estate will have to find out if it’s due. Before this can be discerned, the property will have to be valued and it will have to be established who will be the beneficiaries inheriting from the estate.
Step 5: make application for Grant of Probate. The UK government has stated the following in regard to applying for a Grant of Probate: “Applying for the legal right to deal with someone’s property, money, and possessions (their ‘estate’) when they die is called ‘applying for probate’.” If the person left a will, you’ll get a ‘grant of probate’. If the person did not leave a will, you’ll get ‘letters of administration’.”
To emphasise the above, in situations where the deceased has left a will, a grant of probate will be permitted to the named executors of it, who are able to then handle the assets left by the deceased. Where there is no will left by the deceased, a situation known as “intestacy,” then the person entitled under the law of intestacy will receive the “letters of administration.”
Before probate is granted, an estimation of the total value of the deceased’s estate will be necessary and reported to the Inland Revenue. Part of this valuation includes figuring out whether the deceased has any debts left to pay.
Step 6: hire the services of an estate agent. You are permitted to put the property on the market for sale even though you cannot sell it (exchange contracts) while it is under probate. It can take some time to sell the house, so the earlier you can get it onto the market, the better, and you will need to make sure that you have informed the estate agent about the status of the property, as this will have a bearing on the time it takes to sell it. When the property has been placed on the market, you will also want to make sure that it is looking its best for viewings to obtain the best-selling price possible. This could be something as small as cleaning the house or sprucing up the garden, or it might involve something more substantial like repair work, replacing the roof, or rewiring the house.
Step 7: hire a conveyancer. As well as hiring an estate agent, you will also need to hire a conveyancer or solicitor. Because selling a probate property necessitates more procedures and conditions, it is important to ensure that your conveyancer has experience and relevant knowledge in selling them. Ask them about their experience in selling probate properties and what you will need to know upfront about their prices and terms and conditions.
Documentation required for selling probate property
Your solicitor will ask for a variety of documentation from you so that they can proceed with the selling process and apply for a Grant of Probate. Some of these documents will likely be found among the deceased person’s files and belongings. Alternatively, your solicitor may need to request copies from the relevant people and organisations. Here are the principal documents that will be required to proceed:
- The deceased’s will
- The death certificate (the original certificate and not a copy. It may be worth requesting several originals, if possible, as there will be many other organisations requesting to see the originals, like banks, and you may have to send them off simultaneously).
- National Insurance (NI) number of the deceased.
- Property title deeds
- Information on the mortgage and the lender
- Bank statements
Issues and costs to be aware of
When selling a probate property, you will be subject to much more bureaucracy than compared to a normal sale.
Furthermore, there is a financial implication that you need to be aware of. Selling a probate property means you may have to pay upfront costs prior to obtaining probate and reclaiming the costs back, such as probate fees, inheritance tax, maintenance, and repair costs, as well as other potential costs.
A probate fee will likely have to be paid for and how much will depend on the estate’s value. For properties over £5,000, the application fee will be about £215. Those with low incomes or receiving benefits may be eligible for financial assistance to cover the costs.
Inheritance and capital gains tax
Inheritance tax is usually owed by the estate of the deceased. You may have to pay inheritance tax, or at least part of it, if the estate cannot or doesn’t pay it. At least some of the inheritance tax will have to be paid before probate is granted, which can be claimed back from the estate if you paid it from your own pocket.
If the property being sold under probate has increased in value, capital gains tax may be required paying. Essentially this means that if the property has gained in value since being inherited, the profit of this gain will be taxed as capital gains tax if it is exceeding the tax-free allowance of £12,000 (currently). Note, however, this applies only to the increased value once the property has been inherited and does not apply to the increase in values while the deceased was loving in it.
Conveyancing fees will be needed to be paid as part of the selling process. Check with the conveyancer before hiring if they charge a fixed fee or by the hour. If any complications show up, an hourly fee can quickly rack up costs. You can expect to pay up to about £1,000 depending on the value of the property and other factors.
If a property is expected to be left empty for more than 30 days, you will likely have to pay for vacant property insurance to protect the asset. Vacant properties are at a higher risk of damage and theft. In addition to the vacant property insurance, it is best to remove all valuables from it and take other security and fire prevention measures too.
Commonly asked questions
Q: Does a probate sale take a long time to complete?
A: A probate property sale in the UK will usually take longer than the average sale, which takes between 2-6 months to complete. This is because the probate process must be completed before selling the property is permitted, something that can take anywhere between 3 and 6 months for a Grant of Probate to be issued, or even longer if any complications arise in the process. Placing the property on the market and making sure it’s ready for viewing is allowed before probate is issued and shouldn’t be an issue if prospective buyers are aware.
Given current conditions regarding the pandemic, any further lockdowns or other disruptions could potentially make the process even longer.
Q: is it possible to sell a property under probate?
A: No. Exchange of contracts cannot take place until probate has been granted. You can, however, prepare it for selling and place it on the market.
During this time, potential buyers can make sure that they have their mortgage in principle secured and arrange for a survey to be conducted. Some buyers may be put off by a property being sold under probate, as it will mean having to wait longer than they wanted to, especially if there is a chain involved. This is why it’s very important to make sure that any potential buyer is fully aware that the property is under probate and what the implications are when buying.