Buying a probate property
You might think it’s a little ghoulish to buy a property of someone who has recently died, especially if they passed away in the property, but it does have some advantages, as well as a few disadvantages.
Read our guide to buying a probate property find out what you are getting into and what you might get out of it.
What are the advantages of buying a property from an estate?
When someone dies, all of their assets need to be collected in by their executors (usually a family member or a solicitor), all their debts paid and then the proceeds distributed to the beneficiaries. This is known as their estate.
Buying a property from an estate can have certain advantages. For example, it can often be slightly cheaper than other properties. A god place to find these types of properties are on property auctions. People can be put off from buying a dead person’s house, and so that might encourage the executors to sell it cheaper. In addition, the estate cannot be finalised, and the beneficiaries paid out until the property has been sold, so everyone might be willing to accept a bit less in order to get the deal done quicker.
The executors will be responsible for maintaining the property whilst it’s empty, so the sooner the sell it the better. Not only might this encourage them to sell it more cheaply, but it might make the transaction much faster.
The property is also likely to contain furniture and furnishings such as curtains and carpets. When you are selling a house and moving on, you are more likely to want to take those things with you and would only be willing to sell them to the new owner if they offer you a good price. When you are buying from the estate, they are more likely to want to sell all the contents (other than personal effects) to you, because they are unlikely to have any need for these things themselves and if you don’t take them, they have to pay for the house to be cleared.
A purchase from an estate is also likely to be quicker. One of the things that can hold up a sale is when the seller has difficulties finding and buying their next property, but obviously that won’t be an issue here. On the other hand, because they will be keen to sell as quickly as possible, if you are not able to move fast, they may prefer to sell to someone else. So if you want to take advantage of a cost effective transaction, make it clear that you can move promptly
What are the disadvantages of buying a property from an Estate?
When you buy any property, you want to know as much about the property as possible. When you ask questions of the owner, they must give honest answers, such as whether there have been any boundary disputes, or whether they have breached any of the terms of the lease. They will fill in information forms (known as enquires before contract) giving information about the property such as who is responsible for maintaining the boundaries and when any works were done at the property such as a new boiler or new windows. They will be asked to provide any available paperwork for those works, such as a guarantee for the new boiler. They will sell the property with “full title guarantee” which means that they can tell you everything about the property and must give you honest information about it.
However, when you are buying from an estate, there will be a limited to what the executors can tell you about the property, and what paperwork they can provide, so they will sell it with limited title. This means that you are not being given any guarantees about certain aspects of the property, and you will have to carry out your own enquiries if you are worried about anything. Although this is not ideal, it is not as scary as it sounds.
Firstly, most of the information your solicitor will need about a property they can find out from the searches that that they will undertake. This is information that they obtain from search agencies rather than from the owner or the executors, so they always know it is accurate. Secondly, if there is anything you are concerned about regarding the property, you always have the option of taking out insurance to protect you if you cannot find the information that you need. If your enquiry is reasonable, and the estate cannot help, it would be fair to ask them to contribute towards the cost of any extra enquiries or insurance, so this may be something that you can use to renegotiate the price.
Signing the contract
One of the most important steps in the transaction of selling a property is the signing of the contract. You will sign one copy of the contract as the buyer. The other side will sign an identical copy of the contract as the seller, and then the solicitors swap contracts (known as exchange of contracts), usually by post, so that each side is holding a copy of the contract that has been signed by the other party.
When the owner of the property has passed away, obviously they cannot sign the contract. In those circumstances, the executors will provide the solicitors with a copy of the grant of probate (if the deceased left a will) or letters of administration (if they died without having left a will) which is a court sealed document showing that the executors have authority to act on behalf of the estate. The solicitor will need to satisfy themselves that the grant or letters are correct and in order and will then send a certified copy to your solicitor. This means that both sides solicitors will be able to see that the executors have authority to sign the contract on behalf of the estate, and that once contracts are exchanged, both sides are as committed to the transaction as if the owner had signed in person.
Death between exchange and completion
It does occasionally happen that someone signs the contract to buy or sell a property, and then passes away between exchange and completion. At the point of exchange, a date will have been agreed for completion, and if one of the parties is no longer alive as at that date, it can hold matters up. To a certain extent it may depend on the attitude of the parties, who may be able to negotiate a change in the terms in order to deal with a sudden death, but as a general rule, the following will apply.
Seller dies before completion. In these circumstances, the next of kin of the seller would have to move very fast to get a grant of probate or letters of administration produced by the court, so the executors can complete the transaction.
Buyer dies before completion. Again, if the next of kin can have the executors appointed, they may be able to proceed, but only if the funds are still available. If the purchase was taking place with the benefit of a mortgage, the mortgage offer will lapse on the death of the purchaser, so it is likely that the sale will not go ahead, and the deposit will be forfeited.
If in doubt, speak to your solicitor about how to sell a property of someone who has passed away, as they will be able to guide you through the process. Express Conveyancing can offer you specialist advice and options available to you when purchasing a property from an Estate. Please contact us should you require any assistance in this regard.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.