Can I sell Real Estate during Probate?
Author: Leslie Robinson, B.A. Hons, J.D. (He/Him)
Barrister & Solicitor, Notary Public
As a lawyer, I practice residential real estate law and wills and estates law. As you might imagine, there is quite a bit of overlap since real estate often is a part of someone’s estate. When a registered owner dies, one of the questions I am most asked is, “Is probate required to sell the property or properties”? Real estate agents often ask whether a property can be listed and sold before receiving probate.
The purpose of this short article is to briefly discuss what probate is, what exceptions to the general rule that probate is required, and information on how to approach selling a piece of real estate when it forms part of an estate. Please note that nothing in this article should be construed as legal advice, and speaking to a lawyer about your specific circumstances is essential before doing anything.
The word “probate” is the formalized process of applying for and receiving a Certificate of Appointment of Estate Trustee (with or without a will). In essence, probating an estate is when the court determines the deceased’s will to be their valid last will and where the legal authority to act as an estate trustee is granted. If someone dies without a will, they die “intestate,” and there will be no will appointing an estate trustee. When this happens, someone must apply to be the estate trustee and prove to the court why they are the appropriate person. The Succession Law Reform Act provides a framework for who has priority to apply for this and is based on relationships to the deceased.
To apply for probate, the estate trustee needs to provide the court with certain information which includes (but is not limited to):
- The original will.
- An affidavit of execution signed by one of the witnesses to the will.
- An original death certificate.
- Estate administration tax (which is determined based on the value of the estate).
While the purpose of this article touches briefly on the requirement to pay estate administration tax, please get in touch with our office if you would like to know more about how it is calculated. We highly advise that an estate trustee work with an experienced wills and estates lawyer to prepare the application to the court to avoid any errors that the filing clerks at the court may detect. Application errors are the primary reason for delays in the court issuing the certificate.
Where the deceased owned real estate, bank accounts with significant value, and investment accounts without designated beneficiaries or a safety deposit box at a bank, probate is required to manage and distribute the assets. However, Real estate is the primary concern for many people. The general rule is that a Certificate of Appointment of the Estate Trustee must be obtained before anything can be done with the real estate. However, there are exceptions to the general rule, such as where the real estate value is less than $50,000.00 or where the “first dealings exemption applies”. The first dealings exemption applies when the transaction would be the first since the property was converted to the Land Titles system from the old Registry System. If either of these exemptions exists, the Land Registry Office will waive the need for probate, resulting in lower overall costs and a faster sale since there is no delay in getting a Certificate of Appointment of Estate Trustee. It is essential to point out that these are rare circumstances. In most cases, probate is required to transfer title to the personal representative, who then has the authority to share the sell the property.
Generally, it can be challenging to determine how long it will take for the court to grant probate. Factors that weigh heavily on time include the court where the application is being filed and reviewed and whether there is a will. The general timeframe is between 4-6 months, but it can be shorter or longer. This time frame can be expedited when we request that the file be escalated by providing a copy of a signed and executed Agreement of Purchase & Sale for a real estate closing.
An estate trustee often wants to capitalize on a specific market and sell the property when the market is hotter. While a property can be listed and sold, an estate trustee must protect themselves by taking certain precautions. If a property is listed, the Agreement of Purchase and Sale should provide for a closing date of approximately three months. However, this may not be enough time to receive the certificate back from the court, so the Agreement should include a clause whereby the parties acknowledge that probate is required and a mechanism to delay closing for a specific period if probate has not been granted by the closing date. If the Seller properly arms themselves with these provisions, the deal might close smoothly. However, without them there is a lot of risk. From the Seller’s perspective, they might have to relist and get a lower offer, but from the buyer’s perspective, they could lose out on guaranteeing a certain mortgage rate beyond a certain time frame if they can’t wait. Legal advice should be obtained from the outset, and our firm routinely represents estates where real estate is being sold or buyers looking to buy from an estate. Contact us today for more information.
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