Acting as an executor for the administration of an estate involves managing all of the assets and liabilities of the estate, while also ensuring you’re meeting the various obligations of an executor, both in the eyes of the provincial court and to the beneficiaries of the estate. One of the primary assets an executor will need to manage will be the deceased person’s home if they owned their own house. In many cases, the home will represent the bulk of or a significant portion of the estate’s value, and so the pressure to sell the property will often be high so that the process can move forward to the point where the assets can be distributed to the beneficiaries. In some cases, the pressure may not be coming from the beneficiaries, but from outside factors, such as a favourable real estate market.
However, selling an estate home requires more than just contacting a listing agent and putting the home on the market. There are a number of steps an executor must take to ensure they are meeting their legal obligations when selling the home, otherwise, they could face litigation from the estate’s beneficiaries. Below, we will answer some of the most common questions executors in Alberta may have about selling a home as part of an estate.
As a named executor in the Will, what should my first steps be after the testator’s death?
The first thing anyone named in a Will as an executor of the estate should do is review the Will with a lawyer. This will help the executor to determine the scope of the estate, identify the estate’s assets and liabilities, and begin the probate process, if necessary.
What is probate?
Probate is the process by which the Will is validated by an Alberta court, and the executor(s) are granted an official appointment by the court to act on the estate’s behalf. Probate is not always necessary, especially in cases where the estate is relatively small. However, in cases where the executor(s) will be required to provide proof of their authority to act on behalf of the estate, such as in the sale of a home, they will need a court’s approval to do so. In Alberta, the probate process can take anywhere from a few months to up to a year, so it is crucial to begin the process as soon as possible to avoid unnecessary delays.
When can the executor sell the house?
As a rule, the house cannot be sold until the probate process has been completed, which allows the executor to transfer the property into their name. Given the length of time it can take to receive a Grant of Probate in Alberta, some executors may feel pressure to sell the property before probate is done. One of the key duties of an executor under the Estate Administration Act is to distribute the estate to the beneficiaries as soon as practicable. In addition, there are several other reasons why a quick sale might be desirable:
- There is an interested buyer with a generous offer, but they are not willing to wait for the lengthy probate process to be completed.
- The cost of carrying the home, including property taxes, mortgage payments, and utilities, is too big of a burden on the estate.
- The real estate market is especially favourable and may not be in a few months’ time.
While selling before receiving the Grant of Probate from the court is not generally advisable, there are certain exceptions that an executor can consider if urgency is an issue:
- Request an expedited probate process from the court. While it is open to parties to make this request, the decision of whether or not to grant it will be at the court’s discretion. Given the current backlog, it is unlikely expedition would be granted without a very compelling reason.
- Enter into a Tenancy-at-Will agreement with the buyer. This is an agreement that allows the buyer to move into the home prior to actually transferring ownership of the home. However, this situation can pose risks for the executor that may not be advisable, especially considering that the agreement will not expedite the distribution of the estate, or the real estate closing.
- Apply for a Limited Grant of Probate from the court, which allows a court to grant probate with respect to a specific asset of the estate, such as a piece of real property. This will enable the executor to sell the home prior to receiving a full Grant of Probate, however, it may add additional costs to the estate.
When preparing to sell the property, it is also incumbent upon the executor to get a trustworthy appraisal of the property to avoid potential claims from the beneficiaries that the property was sold below market value.
What if the testator owned the home jointly with someone else?
The executor can only deal with the testator’s real property if the testator was the only person on title, or if they owned a percentage of the interest in the property as tenants-in-common. If the testator owned the home jointly with someone else, such as a spouse, or one of the testator’s children, then the surviving owner will automatically become entitled to transfer the deceased person’s interest in the property into their name by right of survivorship. In this situation, the property would not have to be probated prior to the transfer.
Calgary Probate and Estate Administration Lawyers
At DBH Law, we understand the stress that can come with the administration of an estate while you are still in the grieving process after losing a loved one. We aim to make the process as simple as possible for our clients while keeping costs down whenever possible. We are practical and pragmatic, focusing on your precise needs and avoiding unnecessary work.
The exceptional estates and real estate lawyers at DBH Law are responsive and communicative and will provide you with legal guidance on all of your estate planning needs, including probate and estate administration. We can be reached online or by phone at 403.252.9937.