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Are you an executor selling an estate property?

When administering an estate, depending on the size of the estate, the executor may be responsible for a number of tasks. 

For example, if the deceased only had cash in bank accounts, the executor will be responsible for liaising with the bank, attending to the bank’s requirements in order to have the bank account closed. Once all requirements have been met, they will be entitled to receive the funds from the accounts and deposit them into an estate bank account.

What should an executor consider if they have to sell a property for the estate?

Where an estate has a property, it may be the case that the executor is responsible for selling the property on behalf of the estate.

In order to sell property on behalf of the estate, the executor must:

1. Ensure the property has been transferred to the executor’s name. 

In order to transfer the property into the executor’s name, the executor may have to obtain probate. In New South Wales, the executor must obtain probate. However, in Queensland, there is an exception that where a property is the only asset of the estate, the property can be transferred to the executor in the absence of probate.

2. Ensure the property has been valued or appraised.

Once the property has been transferred to the executor’s name, the executor should take steps to either have the property formally valued, or appraised. The difference is:

a. A formal valuation is conducted by a valuer, normally for a fee (that varies according to the size, location and type of property). As a general rule, a formal valuation is more in line with a bank valuation and therefore, is typically lower than a market appraisal.

b. A market appraisal is conducted by a real estate agent. If the executor is opting to obtain a market appraisal, it is prudent to source 2 or 3 appraisals from different real estate agents local to the property. Converse to a valuation, market appraisals typically come in higher than a valuation.

3. Take advice in relation to the best method to sell the property. 

A real estate agent will generally give you feedback in relation to whether the property is best sold by private tender or auction. It is important for this advice to be confirmed in writing to the executor in the event that the beneficiaries query the method of sale used.

4. Ensure any mortgages registered over the property are dealt with.

If a mortgage is registered over the property, it is important this is addressed. I have noticed that it is a common occurrence that a mortgage has been fully paid, but still remains registered on the title for the property. 

At the outset, the executor should have a clear understanding of the estate’s assets and liabilities. If the deceased’s mortgage has been paid, then steps can be immediately taken to have the mortgage discharged from the property. This will save time when it comes to the sale of the property and the settlement period.

5. Ensure all receipts and accounts for works to the property in preparation for sale are retained, especially if the property is an investment property.

It is not uncommon for an investment property in an estate to need a coat of paint, new carpets or some renovations to prepare it for sale. It is important to retain a proper account of all monies spent on the property preparing it for sale as this will be needed by the accountant when it comes time to finalise the taxation for the estate.

Does the executor have to disclose the reserve price to the beneficiaries if the property is being sold at auction?

This is point of contention which seems to frequently arise in estates where properties are sold at auction. Understandably, there are two perspectives.

An executor’s duty is to the beneficiaries of the estate. Therefore, it is often the view of the beneficiaries that the executor is under an obligation to share the reserve price set for the auction.

However, the contrary view is that an executor’s fiduciary duty is to the beneficiaries, and they are responsible for administering, and where possible, maximising the value estate. With this in mind, sharing a reserve price with the beneficiaries may not be in the best interest of the estate and achieving the best possible price for the property.

In my view, where there is an estate property being sold at auction, the executor should take advice from the real estate agent engaged to assist with the sale. If the agent advises that the reserve price should be kept confidential to ensure the best turn out on auction day, then the executor should act in accordance with that advice.

If you are selling an estate property and have any questions in relation to the sale process or the above checklist, please do not hesitate to contact us.

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The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, Wills, Estates and Probate Lawyers (WEP Lawyers) cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. WEP Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. WEP Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.

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Written by—

Chloe Kopilovic

Call 07 3035 4077 to speak with our team now