When a person dies, their estate must go through a process known as probate, where all their assets are identified, valued, and distributed according to the terms of their Will or the laws of intestacy (if they died without a Will). This includes the sale of any real estate. Selling real estate during probate is known as a probate sale.
Although a real estate sale usually requires a quick turnaround, once all relevant documents are prepared, the sale's overall schedule is primarily governed by the probate process. The main steps of a probate real estate sale are: Determine if the property is still in probate; Ensure all estate-based debts and taxes are settled; Obtain instructions from the executor or administrator; Valuate the property; Prepare the property for sale; Decide how to sell; Instruct a solicitor; Market the property; Review offers; Complete the sale; Update HM Land Registry and other relevant authorities.
What is probate, and why does it matter when selling
Probate is the legal process that follows someone’s death. It proves that their will, if they left one, is valid; confirms who is in charge of the estate; identifies the assets, debts, and taxes; and oversees these steps. An executor carries these out if there is a will; if not, a court appoints and monitors an administrator. They possess legal authority to sell and transfer the assets, including property.
The timing of selling a probate property is affected by the probate process and the property's ownership. Property ownership matters when selling a property during probate. If the deceased owned it solely in their name, the executor or administrator will transfer the ownership when selling it. If they owned a share of the property, the sale process would be different.
Check if the property is in probate
To check whether the property is in probate, first locate the deceased’s death certificate. Then look at the Will, as it typically names the Executors or Administrators of the estate. The Executors are named in the Will and confirm whether the deceased left a Will. If not, the closest living relatives apply to the Principal Registry of the Family Division for Letters of Administration, which give them the title of Administrator.
Once these documents have been found or the information gathered, a simple visit to the Government-run website that lists all English and Welsh grants of probate. This website lists all recent grants, and anyone can search it. If the property is in Scotland, it is a simple matter of checking with the Sheriff's Court in the area where the deceased last lived, as only that Court issues Certificates of Confirmation in these matters. In Northern Ireland, the websites of the Northern Ireland Courts and Tribunals Service provide similar information in their search facilities.
Whenever someone dies, it is common for one or more funeral bonds to have been set up by the deceased while they were alive. This is usually done as a prudent financial planning measure to remove the cost of the funeral from their family. The unfortunate part is that people often take these short-term insurance plans and forget about them, limiting the funds available to cover the funeral. The action of locating these insurers, the policy's face value, and the fact that the family do not have to worry about funeral expenses need to be communicated to all those involved in the sale.
The role of the executor or administrator
Normally, a deceased person’s will names one or more executors. Their job is to administer the estate in accordance with the will. If there is no will or the executors cannot act, someone must apply to the court for letters of administration and be appointed as the estate's administrator. The administrator’s duties and powers are similar to those of an executor.
The executor or administrator is legally permitted to sell a property in the estate or the intestate estate. However, they must do so prudently and in the best interests of the estate and its beneficiaries. If the executor is also a beneficiary of the estate and sells the estate property for a value that is less than what it should be sold for, other beneficiaries may sue the executor for breach of duty. The executor or administrator should not sell to themselves or a connected party unless permitted by the will, and should also avoid situations that give rise to a conflict of interest.
Proof that the individual is entitled to sell the property should be made available to potential buyers or their solicitors. If they do not receive it, buyers may be inclined to withdraw their offers, resulting in unnecessary delays.
Valuing the property
Two valuations might be needed: one to assess the property's market value and a second for estate accounts if the estate exceeds £325,000. The estate value is usually the value of all assets and liabilities owned by the deceased at the date of their death, and a property’s estate value is generally calculated as the open market value at that date.
To determine the market value, evidence of the sale price of similar properties sold around the same date as the death should be gathered for at least fourth months either side; beyond this period the value can become less relevant for buyers, depending of the property price range, local market conditions and whether any major property issues are also influencing prices in the area at that time. These local comparable prices can be provided by local estate or letting agents for free; agents usually have access to a database that cross-references prices and locations to ensure the best comparable sales are identified. If detailed Woodland Trust information, easily downloaded from the Woodland Trust website, shows no significant issues with the property or the local area, and if the local market conditions are stable, the market value is acceptably accurate.
If property agents disagree on the property's value by more than minimal tolerances, or if the property is unusual or has suffered major issues that might be affecting the market, a complete, professional, independent valuation will be needed. Listings for homes with significant problems, such as an old who-house listing or titles that land agents might refer to as ‘posh-kettle-for-posh-houses.com’ are likely to hold major calls for some time until the owner is willing to accept a significant sale price drop, whatever the reason for it – the problem, error or issue being either rebuilt or put right by the new owner, whatever it is.
Getting the property ready for sale
In any sale, getting the property ready is vital to securing a reasonable price and completing the deal promptly. A probate property typically requires more work than normal because it has often been unoccupied for some time, perhaps even a long time. Tasks to consider include:
- Making essential repairs. The property must be structurally sound. Significant repairs, such as roof damage or dry rot, should also be addressed if possible. - Carrying out safety checks. Safety checks should be conducted on gas and electrical systems, as well as any appliances. An electrical test certificate and a gas safety certificate should be obtained. A risk assessment for lead paint, legionella bacteria, and asbestos-containing materials should also be conducted. However, it is not necessary to carry out the work recommended by these checks unless required by law. - Decluttering and cleaning. If the property is empty, could you arrange for a deep clean? If it is not empty, the family and friends of the deceased should sort through the belongings as quickly as possible. - Making a good first impression. Viewings should be arranged when the property is clean, tidy, and smells pleasant. - Obtaining an energy performance certificate. An EPC is required for a sale. - Listing items for sale. A list, and preferably photographs, should be prepared of all items being sold with the property. It is a good idea to state how fittings not listed in the EPC will be treated, as this will reduce the risk of buyer complaints later. Detecting omissions in this list is one of the most common reasons for a reduction in purchase price.
Choosing how to sell
Some of the steps in selling a probate property are more complicated than those involved in selling a normal property. Selling a house, flat, or bungalow which is not in probate is usually clear-cut and, at times, simple. The selection of how to sell that property is one of those steps. Although this might look simple, it is essential to keep in mind the following issues:
- How quickly do the executors want to sell? - How much risk is the executor prepared to take? - How much will it cost to sell the property?
There are three standard methods for selling property — a traditional sale, an auction sale, or a fixed-price sale — and the choice usually depends on the answers to the questions above.
Instructing a solicitor or probate professional
Instructing a solicitor or probate professional
A solicitor or probate professional provides formal advice and completes the legal work when selling a probate property. Their services typically include checking the grant of probate or letters of administration, advising on the validity of the will, obtaining the local authority and other relevant property searches, preparing the sale contract, answering buyers’ questions, obtaining the completion statement from the seller’s bank, sending the signed transfer deed to the buyer’s solicitor, obtaining the sellers’ keys, dealing with the exchange of contracts, completing the sale, discharging any outstanding mortgages and other legal charges, and preparing and submitting the tax return to HM Revenue and Customs.
Fees vary considerably, but a straightforward property sale may cost only £500 plus VAT, disbursements, and other expenses. As with estate agents, enquirers should carefully compare fees, taking into account what work is included. Many probate sales now also involve an estate or funeral friend. While not a statutory requirement, appointing a professional can often speed up estate administration, especially for someone without much experience in estate administration and property sales. For more complicated estates, specialist estate administrators are essential.
To assist in the sale of property, the estate administrator must prepare a complete account of the estate that values the property at market value. The estate’s HMRC tax return requires this standard account of the estate and shows the asset values at the date of death, including the property. Any resulting tax liability is payable by the estate. If property is sold for less than the market value declared on the estate tax return, a capital gain will usually arise and be chargeable to the beneficiaries. Estate property must be transferred to the new owner by a deed of transfer. If the estate is taxable and the document is executed within three years of the date of death, the deed must be stamped with a transfer declaration. When property is inherited, the probate office supplies a free copy of the inheritance tax return at the same time as issuing the grant of probate or letters of administration.
Marketing the property
Once a price is agreed upon, the next step is to market the property for sale. While it’s possible to place “For Sale” signs or ads in local newspapers, the most effective way to sell a property is through a central online property portal and a traditional property brochure with photographs. Most estate agents use the two largest portals, Rightmove and Zoopla, and produce a full-colour booklet as part of their service.
The marketing process requires the following details. It’s vital to disclose that the property is being sold as part of a probate and to confirm that the seller is the executor or administrator.
All properties must have an Energy Performance Certificate before they can be marketed for sale. I think this can be obtained by engaging an energy assessor, and it is best to do so early in the process. The potential energy rating and any improvement comments should be made available to prospective purchasers.
The brochures will include a statement disclosing that the seller is the executor or administrator of the estate, the condition of the property, the Fixtures and Fittings document, and any other information that may affect the selling price – e.g. that the property has remained unoccupied for some time or that a closing date or best offer is being sought.
Offers and accepting a sale
When buyers make an offer, please review it. Some offers may be best and final. These give only one chance to bid. Others may ask for conditions, such as a survey or counsel, before agreeing. Accepting an offer means replying with acceptance terms. Acceptance notifies the buyer’s solicitor and any other party who made an offer, ensuring fairness.
Asking for the right price is vital. An estate agent should set the price based on the current property market. Offers below this price should be handled with caution. Most sellers will not accept less than the estate agent advises without an apparent reason, such as other sales in the area.
An offer is considered best and final when there is only one opportunity to make an offer. This option may come with conditions, such as a property survey or approval from external counsel. Once an offer is accepted, it is crucial to keep all parties informed. Acceptance means not letting the buyer's solicitor know that the offer has been approved. At the same time, all other parties who have expressed interest in the property must also be informed to maintain fairness in the process.
Inheriting debts and taxes
Estate debts, tax liabilities, and the responsibility for paying them can all be inherited along with the property. Understanding which debts need to be settled and which taxes apply to the estate is vital information for the seller. While the seller will be required to pay these costs from the estate upon completion of the sale, the responsibility may fall to the beneficiaries, depending on the estate's structure. Inheritors who have not yet received property and are awaiting the necessary communication should seek professional advice.
Any inheritance tax (IHT) due on the estate must be paid before the estate can be distributed. A successful probate application will confirm the estate's tax position. After receiving a grant of probate or letters of administration, the executor or administrator must submit a tax return to HM Revenue and Customs (HMRC) informing them of the estate's value, any income received, and any reliefs applied for (e.g., a share in an estate that qualifies for business relief and a gift to charity). Even if no inheritance tax is due, a return may still be required.
If inheritance tax is due, payment can either be made directly or through the sale of an estate property. If a property is sold to pay IHT, it must be sold within six months of death to allow for this settlement. The executor or administrator may also request that HMRC accept payment by instalments, particularly if the estate includes illiquid assets, such as a business.
In addition to IHT, property inheritance may also trigger further capital gains tax (CGT) liabilities for the beneficiaries when they eventually sell the property. However, for the person inheriting the property, the sale may be exempt from CGT. The estate may also be required to register for self-assessment for income tax purposes and will then incur a liability on income earned after the date of death. If a property receives income after the date of death, income tax must be paid by the executor or administrator. I want to ask for guidance from an accountant or tax adviser at this stage, as they can help ensure that all deadlines are met and all reliefs claimed.
Completing the sale
The sale comprises several necessary steps, although the process usually follows a set order. Once an acceptable offer has been accepted, the buyer’s solicitor will send draft sale documentation to the seller’s solicitor. The seller’s solicitor will complete and return the documents verifying the seller’s identity and entitlement to sell, and prepare the completion statement. The completion statement will set out any outstanding items that need to be paid or adjusted at completion and will show how much money the seller will receive, along with confirmation of the identity of the person to whom the sale proceeds will be sent.
Once the transaction is complete, a contract will have been signed by both parties, funds transferred, and ownership transferred. On completion day, the buyer will arrange for the transfer of completion funds to the seller’s solicitor, who will confirm receipt, and keys will be handed over. The seller’s solicitor will send confirmation of the transfer to the buyer’s solicitor, along with all final documents.
After the sale and transferring ownership
The final steps in selling a property, transferring ownership and notifying authorities, are more straightforward when following a clear checklist. Once the sale is complete, the funds are received, and the sale proceeds can be distributed to the beneficiaries.
The solicitor or probate professional will draw up a deed of transfer and handle all necessary notifications and other paperwork after the sale. Taxes and the Capital Gains Tax risk need to be considered and dealt with when needed. The record of the sale should be kept with other estate accounts and documents.
The transfer of ownership takes place once the Sale Contract and Land Registry documentation are signed by the executor or administrator and the funds for the sale have cleared into the estate account. The solicitor or probate professional will notify the Land Registry of the change of ownership. The company responsible for domestic council tax in the area will also receive notice of the change in ownership and will then send the bill to the new owner.
The completion of the sale transfers all the rights and responsibilities for the property to the new owner, subject to any estate tax or other issues. Once the sale has exchanged contracts, the original Sale Contract signed by the seller is handed over to that buyer’s solicitor or legal adviser. The original Duplicate Sale Contract, together with its Land Registry entry, is then handed over to the new owner.
The estate should retain all copies of the Sale Contract and all documents received with it. A short note of the successful sale, retained with all the other estate documents, provides the necessary proof. A list of sale proceeds and expenses will also be required to complete the estate accounts.
These key items are often sufficient for general record-keeping and accounting checks. However, beneficiaries should be warned that UK tax regulations may also require additional details about the estate accounts. If the deceased owned the property for many years and it was worth much more when sold than when inherited, some inheritance tax may be due on any profit. This profit is known as Capital Gains Tax.
Common pitfalls to avoid
Delays, misinformation, and difficulty navigating the administrative process can make the sale of a probate property especially complex. Avoid the following pitfalls to ensure a smooth transaction:
- Confirm whether the property is in probate. Offerholders must wait for the probate estate to grant authority to sell the property before the sale can take place. In some cases, the property may be removed from probate, meaning the estate no longer needs court permission to sell it. - Ensure proper documentation for the executor or administrator. If there are multiple executors or administrators named in the will or given letters of administration, one may wish to act alone. However, other executors must approve or formally retire from the process. Misunderstandings about the scope of authority can lead to difficulties at the point of sale.
- Engage a qualified appraiser or chartered surveyor to determine the property’s value. For estate tax purposes, this value may differ from the market value needed for selling. Failing to disclose or misrepresenting the property's value can have tax consequences for the seller and other beneficiaries. Obtaining two separate valuations—one for tax and one for sale—can help avoid complications. - Be sure to disclose the property’s probate status in marketing materials. Potential buyers will want to know this information. Delays in forwarding this essential information can complicate the process.
These steps will help to avoid common pitfalls and streamline the process of selling a probate property in the United Kingdom.
Conclusion
A probate property sale involves several steps. These include checking whether probate applies, ascertaining whether an executor or administrator is acting on behalf of the estate, valuing the property, getting it ready for sale, deciding how to sell, instructing a solicitor or probate professional, marketing the property, reviewing offers, ascertaining if there are any debts attached to the estate, completing the sale, and finally, after the sale, transferring ownership and distributing any remaining funds.
Probate can often be a lengthy process, and selling a probate property is usually a part of settling the estate. So, sellers should try to get the property on the market as quickly as they can. Having the estate accounts prepared by the time an offer is accepted should help speed up the sale. Also, if an offer is accepted while the estate's tax valuation is still being prepared, it can still be valid. On many occasions, I would like to ask for approval of these offers before accepting them, however.
