When a person (who I will refer to as the “Seller”) becomes unable to live independently or passes away, their family members often want to clear out, list and sell any real estate owned by the Seller, as quickly as possible. Concerns about fluctuating real estate market conditions, risks related to a vacant home, carrying costs and (if alive but incapable) high care facility expenses often motivate these desires to act quickly. However, any number of obstacles may arise when attempting to sell real estate owned by an incapable or deceased person.
I am frequently contacted by real estate professionals and family members who are involved in a real estate transaction already under contract where several of the following obstacles are present; although we are usually able to address the obstacles in time, the added stress and legal expense may have been avoided entirely. The purpose of this article is to warn real estate professionals and family members of the most common obstacles that I see as a lawyer, and to suggest certain actions that may reduce the impact of such obstacles or avoid them altogether.
Note: I am a lawyer licensed to practice in British Columbia. Although I have attempted to make this article broadly applicable for a Canadian audience, jurisdictional variation in legislation and land title systems requires that you consult with a professional in your province or territory.
Common obstacles for selling the real estate of an incapable person.
1. Original Powers of Attorney
A Power of Attorney (“POA”) is a legal document which gives someone else the authority (an “Attorney”) to make decisions or act on another person’s behalf, including by paying bills or selling assets like real estate. The original (wet ink signed on paper) POA document will likely be required if it is to be used for land title purposes. Often, Attorneys have a paper or digital copy of the POA, but the location of the original POA is not immediately known. The lawyer or notary who prepared the POA may hold the original; or it may be in the Seller’s “important documents” folder or safety deposit box. Request that the Attorney show you the original POA in person, long before a property is listed for sale.
2. Enduring/Continuing Authority
Not all POAs are equal; “general” POAs stop being effective if the grantor loses mental capacity, while “enduring” or “continuing” POAs continue being effective even when mental capacity is lost. Ensure that the Seller has granted a valid “enduring” or “continuing” POA before listing the property for sale, if mental capacity is lost or at risk of being lost.
3. POA Conditions
Some POAs are drafted with conditions to be met before the instrument can be used – i.e.: having the written opinion of two medical professionals confirming that the grantor has lost mental capacity. Often such conditions are easily proven to have been met; however, wherever participation by a third party (i.e.: a medical professional) is required, additional time may be required to obtain the necessary evidence.
4. Alternate Attorneys
Many POA instruments name multiple people as successor Attorneys to each other (i.e.: spouse first, eldest child second, etc.). Before an Attorney further down on the list is able to legally use the POA, they may need to prove that certain conditions have been met (i.e.: that all of the Attorneys named before them are either incapable or have died). As with other conditions, additional time may be required to obtain the necessary evidence.
5. Registration of POA Instrument
It may be necessary to register a POA instrument with the land titles office prior to its use on a real estate transaction. Complete this step early so that, if the POA registration is rejected for some reason, there is sufficient time to address the reason for the rejection.
6. Committeeship/Adult Guardianship/Property Trusteeship
If the original POA cannot be found, or if some other obstacle noted above cannot be overcome, then a Court Order may be necessary for someone to have the legal authority to sell the real estate. Most commonly, a Court Order declaring the Seller incapable, and appointing a person to be the Committee/Guardian/Trustee of the Seller will be required. Written opinions and/or affidavits from 1-2 medical practitioners, in addition to evidence regarding the Seller’s finances and other assets, may be challenging to obtain.
Other complexities may include: disagreements among family members/friends as to who is most appropriate to be appointed by the Court, service requirements of the Court application materials on the applicable parties, and delays in getting a judge to hear the application. Court applications of this nature can be expensive, but may nevertheless be preferred to having the real estate sit vacant or be subjected to vacancy taxes or other penalties.
Common obstacles for selling the real estate of a deceased person.
7. Probate
When a person dies, any POAs they may have granted cease to have any effect. After death, the Executor of that person’s Will assumes authority over their assets. “Probate” is the process of confirming the validity of the Will, and the authority and rights granted under it. If there is no Will, a similar Court process will appoint an Administrator for the estate. In either case, it may take at least two to six months for an Estate Grant to be issued, and potentially longer if there are any disagreements among family members/friends about the validity of the Will or who is most appropriate to be appointed by the Court as the Administrator.
8. Transmission
Once an Estate Grant is issued by the Court, the real estate will need to be “transmitted” into the name of the Executor/Administrator so that they can sign the closing documents for a real estate sale. It can take three to four weeks or longer for such a transmission to register, and so I like to begin the process of transmission as soon as an Estate Grant is issued.
Common obstacles for selling the real estate of both incapable and deceased persons.
9. Listing before authority is confirmed
While it is possible to list real estate for sale before the validity of a POA instrument is confirmed, or before an Estate Grant is issued, it may not be advisable to do so. Once a property is under contract for sale, other matters may distract from attending to the obstacles highlighted in this article in a timely fashion. As noted above, I am frequently contacted shortly before a closing, and while I am generally able to assist, the costs to clear these obstacles on short notice will likely be higher than if attended to when there wasn’t a time crunch.
10. Pre-deceased owners on title
It is not uncommon for title to a property to continue to name a pre-deceased person as an owner. If that deceased person owned the property as joint tenants with the Seller, then it should be relatively simple to update title to remove that deceased person as an owner, provided an original death certificate is readily available (however, it may be difficult to obtain a death certificate depending on the relationship with that person, or the jurisdiction in which they died).
If that deceased person owned the property as a tenant in common, then that deceased person’s personal representative (i.e.: Executor/Administrator) will need to participate in the sale of that property.
11. Name variations and inconsistencies
Name consistency is generally required when dealing with real estate. If an owner’s or Attorney’s name is not exactly the same (spelling, inclusion of middle name(s), etc.) on any one or more of: title, their current government-issued identification, a POA instrument, their death certificate, their Will or an Estate Grant, then a Statutory Declaration or affidavit prepared by a lawyer or notary may be sufficient to address and overcome the inconsistency. In the case of an Estate Grant or other Court Order with an incorrect or omitted name variation, a corrective document may need to be obtained from the Court. In some cases, a POA instrument with an incorrect name may be entirely unusable.
Identify name variations and inconsistencies early and obtain professional advice about the requirements to address them, long before any closing date.
12. Documents in other languages
When an essential document is in a language other than English (i.e.: death certificates issued by another jurisdiction), it is likely that a certified translation of it will be required. There may be additional requirements, such as the translator swearing an affidavit or being on an approved list; before paying for a translation, understand all that will be required of that translator.
13. Certificates of Pending Litigation, Caveats and other Liens
If there is litigation involving the Seller or the specific property that is wanting to be sold, a certificate of pending litigation, caveat or other lien registered on title will likely prevent the sale of that property from completing.
This article provides legal information of a generalized nature, but not legal advice. Please consult with a legal professional to ensure the accuracy or applicability of anything mentioned above to your specific circumstances.
Zachary Murphy-Rogers is a partner at Clark Wilson LLP in Vancouver, BC, where he primarily practices in the areas of Wills, Estates and Trusts (including planning, probate/administration and litigation), Adult Guardianship, and Surrogacy Law.
