Selling a house in probate

What probate is, and why it matters for the house

When someone dies, their property does not pass straight to the people who inherit it. Someone has to be given the legal authority to deal with the estate: to collect in money, pay debts and tax, and then sell or transfer what is left. In England and Wales that authority is a grant of representation, usually just called probate.

If there is a will naming executors, they apply for a grant of probate. If there is no will, or no executor able to act, the closest relatives apply for letters of administration and become administrators. The process and the effect on a house sale are much the same either way. For simplicity, this guide says executors to mean both.

For a house in the dead person's sole name, nobody can sell it until the grant has been issued. The grant is what the buyer's solicitor and the Land Registry rely on to show that the people signing the transfer have the right to sign it. If the house was owned jointly as joint tenants, it usually passes automatically to the surviving owner and probate may not be needed for the house itself. If it was owned as tenants in common, the dead person's share forms part of the estate and does need a grant.

The legal process, step by step

Every estate is different, but the order of events for a house is broadly the same.

• Find the will, if there is one, and confirm who the executors are
• Secure the house: locks, insurance, utilities and post
• Value the house as at the date of death
• Work out the value of the whole estate and whether inheritance tax is due
• Report the estate to HMRC and pay any inheritance tax that has to be paid before the grant
• Apply for the grant of probate or letters of administration
• Market the house and agree a sale, which can start before the grant arrives
• Exchange and complete once the grant has been issued
• Pay any remaining debts and tax, then distribute the money to the beneficiaries

Many executors wait for the grant before putting the house on the market. That is the cautious approach, but it is not a legal requirement. You can instruct an agent, take viewings and accept an offer while the application is with the probate registry, as long as everyone understands that completion depends on the grant. Buyers who need to move by a fixed date may find that uncertainty hard to live with, so be open about where the application stands.

Who needs to be involved

The executors

Executors are responsible for the estate and personally accountable for how they handle it. Where there is more than one, they normally have to act together, and all of the executors named on the grant usually have to sign the sale paperwork. One sibling cannot sell the house on their own if four of them are executors.

Executors also have a duty to get a proper price. Selling cheaply to a friend, or to one of the beneficiaries without the others' agreement, can leave an executor open to a claim. Keep a record of how the price was reached and who agreed to it.

A solicitor

You do not have to use a solicitor to apply for probate, and many people with simple estates do it themselves. You will need a conveyancing solicitor or licensed conveyancer to handle the sale of the house. For anything more involved, such as inheritance tax, a disputed will, several properties or beneficiaries who do not agree, a solicitor who specialises in probate and estate administration is worth having. They see the same problems every week and know the order in which to tackle them.

A surveyor or valuer

The estate has to be valued as at the date of death, and the house is usually the largest part of it. For a small estate a careful estimate based on local sales may be enough, but where inheritance tax may be due, or the figure might be questioned later, a written valuation from a RICS registered valuer is the safer choice. HMRC can challenge a value it thinks is too low, and that valuation also becomes the starting point for any capital gains tax when the house is sold.

HMRC

Every estate has to be valued for inheritance tax, even if no tax turns out to be due. The current threshold is £325,000, with an additional residence nil-rate band of up to £175,000 where a home passes to children or grandchildren, and unused allowances can sometimes be transferred from a spouse or civil partner who died first. Inheritance tax is normally due by the end of the sixth month after the death, and interest is charged after that. Some or all of it usually has to be paid before the grant is issued, which can be awkward when the house is the main asset. Ask your solicitor or the bank about the options for paying from the estate.

If the house sells for more than its probate value, the estate may owe capital gains tax on the increase. If it sells for less within four years of the death, it may be possible to claim back some inheritance tax. Both are reasons to keep careful records of the valuation and the sale.

Others you may hear from

The mortgage lender, if there is one, the buildings insurer, the council for council tax, utility companies and any beneficiaries named in the will. If the person who died was in care, the local authority may also have an interest in the estate.

Looking after an empty house in the meantime

Probate can take months, and the house usually sits empty for most of it. Tell the buildings insurer as soon as possible. Many policies restrict cover once a house has been unoccupied for a set period, and may require regular inspections or the water to be turned off. An uninsured flood or break-in can cost the estate far more than the premium.

In England, an unoccupied house where the owner has died is often exempt from council tax until probate is granted, and for a period afterwards while it remains unsold. Contact the council to ask. Keep the heating ticking over in winter, collect the post and check the house regularly, or ask a neighbour to.

Clearing the contents is often the hardest part emotionally. Do not rush it, but do agree between the family who is doing what, and keep a note of anything of value that is sold or taken.

When the house is inherited by siblings

Most of the stress in a probate sale does not come from the law. It comes from several people, often grieving, having to make one decision together about a house that meant something to all of them. Brothers and sisters can want different things: one wants to keep it, one needs the money now, one lives abroad and wants to be left out of it.

It helps to agree the ground rules early, ideally in writing, before anyone has an offer in front of them:

• Who will be the main point of contact with the solicitor, the agent and any buyer
• How decisions will be made, and what happens if you cannot agree
• Who pays for insurance, bills and repairs while the house is unsold, and how that is repaid from the estate
• Whether the house will be sold as it is, or cleared and repaired first
• The lowest price everyone is willing to accept, and for how long that stands
• Whether any sibling wants to buy out the others, and how a fair price would be set

Write it down and send it round. A one-page note agreed by email avoids a great deal of argument later about who said what. If a disagreement looks like it is becoming serious, mediation is usually quicker and far cheaper than court, and a probate solicitor can suggest how to arrange it.

Ways to make the process less stressful

Use a specialist. A solicitor who deals mainly with probate will know what HMRC and the registry expect, and can keep the tax and the house sale moving at the same time instead of one after the other.

Get the paperwork together early. The will, the title deeds or Land Registry title, the death certificate, bank statements, the mortgage statement if there is one, and any surveys, guarantees or planning papers for the house. Gaps are what slow a sale down.

Be realistic about condition. Houses in probate are often dated or have been hard for an elderly owner to maintain. A buyer's survey will find what is there, so it is better to know first and price accordingly than to be renegotiated weeks before exchange.

Choose a route that fits the estate. Selling on the open market usually gets the highest price, but it brings a chain, buyers' lenders and the chance of a sale falling through. An auction suits houses that need work and is binding on the day. Selling directly to a buyer who buys in any condition is simpler and more certain, usually at a lower figure than a patient open-market sale.

Deal with people you trust. Whoever you sell to, ask how they reached their price and whether it can change. Pinelee buys houses directly across Kent and into East Sussex, in any condition, with no board, no listing and no chain, and gives one figure with the reasoning behind it, usually within two to three days of the first call. If selling to us is not the best route for the estate, we will say so.

Before you decide

• Confirm who the executors or administrators are, and that they all agree to the sale
• Get a valuation as at the date of death you would be comfortable defending to HMRC
• Check the inheritance tax position and how any tax will be paid
• Tell the insurer the house is empty and ask the council about council tax
• Agree in writing how the family will make decisions and share costs
• Compare routes to sale on the net figure and the time each will take