We have looked at the importance of having a will and real estate transactions using Power of Attorney, but what about when an owner is deceased and the executor of the estate wishes to sell the deceased's real estate as soon as possible? Well, there can be some challenges here.
The Role of an Executor
Acting as an executor of an estate is an onerous task. The executor's role commences upon death of the will maker. The first matters to be dealt with by the executor include organizing the cremation or burial of the body, cancelling credit cards, attending to minor children and securing any property.
The executor then needs to start the probate process. Probate is the process of seeking court validation of the appointment of the executor.
To apply for probate, the executor needs to:
- get a copy of the current will;
- search Vital Statistics Agency to ensure it is the most recent will;
- provide notice of the application for probate to all the beneficiaries and anyone entitled to make a claim under the Wills Variation Act, which means to all beneficiaries plus spouses and children if any are excluded from the will;
- identify all assets, value of assets and any debts; and
- apply to the Supreme Court of B. C. in most instances there is no need to attend at court but the appropriate information is just filed with the court.
The probate office will require payment of a probate fee prior to issuing the Grant of Letters Probate. The fee is approximately 1.4% of the total value of assets passing under the will. So for a $1 million dollar estate, the probate fee is $14,000.
Once probate is granted comes the hard part paying all the bills, selling all the assets, distributing the estate and paying taxes.
Getting probate usually takes four to six months but the rest of the process can take an additional 12 to 18 months depending on the number of assets, their location and number of beneficiaries. And it is important to keep the beneficiaries up to date as they may not understand the work that needs to be done prior to disbursement of the bequests.
Selling Real Estate as an Executor
The executor does have the authority to list a property prior to obtaining probate but cannot transfer title until probate is obtained. Financial institutions and government agencies, such as the Land Title office, will not allow the executor to deal with the estate property without probate.
If the executor waits for probate, it will be four to six months before the property can be listed. Waiting for probate puts the property at some risk if it is sitting vacant, but reduces an executor's risk as it gives the executor time to determine whether or not there are potential claims against the deceased's estate from family members or creditors.
In many cases the executor and the deceased's family want to dispose of the real estate as soon as possible, so the executor will list the property prior to probate. Any offer received on the property needs to be made subject to probate. An executor should check with the probate office to determine the turnaround times for the granting of probate. Where a buyer is interested in the property but wants possession prior to probate there are a couple of options.
- The buyer could enter into a rental agreement until probate is obtained.
- The purchase could close "in escrow," which is essentially a closing process whereby the buyer has deposited with their lawyer or notary public funds required to complete and if the buyer has a mortgage, the executed mortgage. The buyer gives their lawyer irrevocable instructions to complete as soon as probate is completed, enabling the executor to transfer title in the Land Title office.