Not every property sale comes about because the owner chooses to move home. Sometimes things in life happen that necessitate a sale and often this is to do with ageing and, sadly, the death of someone we know and love.
In this blog we take a look at some of the situations that can mean a property has to be sold in special circumstances, and what you should be aware of. Please feel free to contact us if you’d like more information on selling in any of these situations.
Selling with Probate
If you are applying for – or have already been granted – probate following the death of someone, be that a family member or friend, then this often includes the ability to sell their property.
There are a few things that you need to be aware of if you need to sell through probate.
- You will have to apply for probate if you don’t already have it. Probate can only be applied for by the executors of the will, and in most cases it is advised to use a solicitor to do this as there is a lot involved. Applying for probate can take quite a while – weeks or even months – depending on the estate of the deceased person and its complexity. However, you are able to contact an estate agent and start marketing the property while you are waiting for probate to be granted.
- Inheritance tax may be payable on the estate of the deceased person, so to enable anything owed to be calculated you will need to arrange a number of separate valuations by different estate agents. This will ensure that a fair and accurate valuation is attributed to the property. We suggest getting two or three valuations and you will then take the average value of these. The price the agent gives has to be what they think the property will achieve in a normal, current market. At Cardigan Bay Properties we provide Open Market Valuation for Probate Purposes – we don’t charge for this unless specifically asked to, although some agents do charge so it’s worth checking. One thing you should think about is if the estate looks likely to be over the inheritance tax threshold – if so you will need a Red Book valuation from an RICS registered surveyor. We would also recommend that you get advice from a solicitor as there can be different tax concessions depending on who is inheriting, Also consider capital gains tax, which can apply if a property sells for more than the probate figure – an accountant should be consulted for their professional advice.
- Check the property title and deeds – this should be straightforward if the property is registered with the Land Registry, which most properties are. You can download a copy of the title entries and plan and check everything is in order. However, there is a chance the property isn’t registered with the Land Registry if the owner had it for a long time. If this is the case you’ll need to get the paper title deeds and plan. You should then have them checked by a solicitor in case of any restrictions or defects in the deeds that need sorting ahead of a sale.
- It’s important to check that the property will be insured if it is going to be left empty. Many home insurance policies don’t provide cover if the property is left empty for an extended period so do check on this.
- It is the executor’s responsibility to ensure the property is safe while it is uninhabited. This should include arranging things such as any home insurance that may be needed and checking that the heating is on during the winter months to prevent pipes freezing or damp issues.
- We would also advise you to ensure that maintenance jobs on the interior and exterior are done to help with the sale of the property. For example, an overgrown garden and peeling paintwork can put potential buyers off, so keep on top of the maintenance.
- You should also sign up for the HM Land Registry Property Alert service. This monitors the property against the risk of fraud and is a free service, so definitely something to register for.
With so many checks required with probate sales it’s also important to be clear about timescales. While you can instruct an estate agent to market the property, contracts cannot be exchanged until the grant of probate has been given. It’s also worth remembering that the property will need to be cleared of all contents before it can be sold, which can also take time, so set realistic timescales for yourself and the potential buyers.
Selling a retirement property
Specialist retirement properties are quite different to normal freehold properties in that they may have additional charges or restrictions on a sale. It is therefore important to find out about these elements before you proceed too far down the sales path. A good estate agent will be able to advise on these types of properties and what you should look out for. Things to consider include –
- With retirement properties sometimes charges can be accrued and are only payable on the death of the owner.
- It is possible that there will be one, or more, restrictive sales clauses on the property. For example, it may be that the property can only be sold to another elderly person.
- There may be an exit fee that is payable to the landlord or management company when you finally sell the property.
It’s therefore important that you check the details of the property carefully with your legal advisor and keep your estate agent updated with all the relevant information. There is a Leasehold Advisory Service who can also be helpful for any queries you may have.
Selling with Power of Attorney
If you have power of attorney over someone else’s estate, this means that you have the power to make, or help make, decisions about their property and selling it if required.
Up until 1 October 2007 enduring power of attorneys (EPAs) were the standard. While they can no longer be created, they are still valid if they were properly set up. EPAs can only be applied to financial affairs and property, they don’t apply to health or welfare decisions of the donor.
The Mental Capacity Act of 2005 replaced EPAs with lasting power of attorneys (LPAs), which is what will have been created since 1 October 2007. There are two options for LPAs – one for property and financial affairs, which is similar to an EPA but includes extra safeguards to protect the donor; and one for health and welfare, which allows decisions to be made about care and living when the donor loses their mental capacity.
EPAs became effective as soon as they were executed – if the donor still has the mental capacity. When the donor starts losing that capacity it must be registered with the Office of the Public Guardian (OPG).
The newer LPAs now have to be registered with the OPG before they can be used – no matter if the donor currently has capacity.
You will need to consult a legal adviser if you are selling a property on behalf of someone else, and you’ll need to check if the donor has given any specific instructions within the power of attorney that need to be adhered to. A good estate agent will be happy to help explain all of this to you and give you guidance where needed.
We hope this article has been helpful. If you’re selling in special circumstances then please contact us and we’ll do our best to help answer your questions.