Key points to consider when selling the deceased’s property as executor of an estate.

The executors of a deceased person’s will are responsible for winding up the deceased’s estate and carrying out the terms of their will. Unless the beneficiaries under the will wish to have the property transferred into their names, the executors will need to sell it.

Executors should bear the following points in mind to ensure that the sale process is as smooth as possible.

Grant of probate

If the deceased owned property in their sole name, a grant of probate will be required to enable the executors to sell or transfer the property. The grant is a form of certificate issued by the court that confirms the validity of the will and gives the executors authority to deal with the deceased’s estate. 

The executors should not underestimate timescales for obtaining the grant, particularly if they are intending to apply for the grant personally, rather than through a solicitor and/or if inheritance tax (IHT) is payable. Even in a straightforward estate, it can take two to three months to obtain the grant.

Valuations

As part of the application process for the grant, the executors need to complete either a return of estate information form or an IHT account (depending on the value and nature of the estate), detailing all of the deceased’s assets and liabilities, with date of death balances or valuations. The executors should obtain two or three estate agents’ valuations and take the average as the value of the property, or obtain a surveyor’s valuation.

Check the title and locate the deeds

The executors should also, at this stage, check the title to the property. If the property is registered with the Land Registry, this should be a relatively straightforward matter of downloading a copy of the title entries and plan, checking that the property is in the deceased’s name, and that the plan shows the full extent of the property. 

However, the property may not be registered, particularly if it is in a rural location and the deceased had owned it for a number of years. In this case, the executors will need to locate the paper title deeds, which may be held in safe custody by the deceased’s solicitor or bank, or they may be kept with the deceased’s papers at home. 

Restrictions and defects

Once located, the executors should ask a solicitor to check the title entries and plan, or the paper title deeds, in case there are restrictions affecting the property, or defects in the title, which may need to be dealt with before the property can be sold. It is not unknown to find that the property was never transferred to the deceased on the death of their spouse – and this is not the sort of thing to find out after a sale of the property has been negotiated!

Realistic timescales

When valuing the property, the estate agent may suggest that they have a potential buyer already, or that the property should be placed on the market immediately. While there is nothing to prevent the executors from instructing agents to market the property, or even accepting an offer on it, contracts can't be exchanged until the grant has been obtained. The estate agent and the potential buyers must be given a realistic timescale for obtaining the grant at the outset.

If the executors have accepted an offer on the property soon after the deceased’s death and before applying for the grant, the sale price can be given as the property value in the return of estate information form, or IHT account. 

The executors must also be aware that the deceased’s property will need to be cleared of all its contents before the property is sold and again – something that can be quite time consuming to achieve.

Capital gains tax

Another area that executors need to bear in mind is capital gains tax (CGT). If the house is not sold until some time after the grant has been issued, the value of the property may have increased above the date of death value, and this could lead to the executors incurring a CGT liability. For the year of death and the following two years, the executors have a CGT allowance of £11,100 (for 2016-17). 

If the increase in value of the property after deduction of costs of sale exceeds the CGT allowance, the executors may be able to save tax by appropriating the property to the beneficiaries before exchanging contracts on the sale. The beneficiaries’ own CGT allowances can then be set against the gain – if the beneficiaries are charities, it is important to do this, as charities are exempt from CGT.

If the estate is subject to IHT and the property is sold before HMRC has issued tax clearance, HMRC will seek to take the sale price as the date of death value, so additional IHT may be payable on any increase in value. If the property has sold for less than the date of death value, the executors can reclaim the overpaid IHT.

This article is intended to give a brief overview of the points to consider when selling the deceased’s property, rather than cover all aspects of the procedures involved, or the tax implications. Executors would be wise to take legal advice on the title to the property and the taxation aspects of selling before placing the property on the market.

About the author

Karen Bacon is head of the wills, probate and tax team at Steeles Law solicitors.

See also: How to place a deceased estates notice in The Gazette and a local newspaper

Publication date: 2 July 2016