If you inherit a property following the passing of a parent or another relative, you may decide that selling the property is the best option. However, selling an inherited property can involve a few additional steps compared with an ordinary house sale. Before the conveyancing can be completed, it needs to be clear who has authority to sell the property, whether probate is required and whether there are any issues with the title that need to be resolved.
AFG Law’s Private Client and Residential Property teams can assist with both the administration of an estate and the conveyancing process required to sell an inherited home.
Can you put an inherited property on the market before probate?
In many cases, yes you can put an inherited property on the market before probate. You do not necessarily need to wait for the Grant of Probate before speaking to estate agents, obtaining valuations and putting the property on the market.
However, where probate is required, the executors will generally need the Grant of Probate before they can complete the sale. This means there can be an advantage to starting the process early. You can instruct estate agents and a conveyancing solicitor while the probate application is progressing so that some of the preparatory work can be completed. Your solicitor can advise you on what can be done before the grant is available.
Who sells an inherited property?
If there is a Will, the executors are responsible for administering the estate. Where there is no Will, administrators may need to be appointed through the letters of administration process.
If the property is still part of the deceased’s estate, it will normally be the executors or administrators who deal with selling the property. A common misconception is that a house must first be transferred into the beneficiaries’ names before it can be sold. However, this is not always necessary.
Where everyone agrees that the house should be sold, the personal representatives can often sell it directly from the estate. The net proceeds can then form part of the estate and ultimately be distributed to the beneficiaries. This can avoid an unnecessary transfer of ownership before the sale.
What does the conveyancing solicitor need?
Once the decision has been made to sell the property, your conveyancing solicitor will need information about both the property and the estate. This can include the deceased’s details, a copy of the Will where applicable, details of the executors or administrators and the Grant of Probate or letters of administration once available.
The solicitor will also investigate the property’s title through HM Land Registry. Where the property is registered, the title will provide important information about its ownership and any mortgages, restrictions, rights or other matters affecting it.
The usual conveyancing documents will also need to be prepared for the buyer. Providing information and paperwork as early as possible can help prevent avoidable delays once a buyer is found.
What if the inherited property is unregistered?
Not every property is registered with HM Land Registry. This can be more common with properties that have remained in the same ownership for many years.
If an inherited property is unregistered, the original title deeds and historic documents become particularly important because they are used to establish ownership. Missing deeds or unusual title arrangements do not necessarily mean that a property cannot be sold, but they can require additional work.
This is one reason to involve a conveyancing solicitor early rather than waiting until a buyer has been found.
AFG Law recently acted for an executor whose inherited property appeared to have only around 30 years remaining on its lease. Investigation of neighbouring titles and historic council records revealed that the deceased owners had actually purchased the freehold in 1990, allowing steps to be taken to correct the title and move the sale forward.
What if there is still a mortgage on the inherited property?
A mortgage does not automatically prevent an inherited property from being sold. Your solicitor will establish what is secured against the property and arrange for the relevant mortgage to be repaid from the sale proceeds on completion.
The exact position will depend on the estate and the mortgage arrangements, so the lender should be notified following the owner’s death.
You should not assume that mortgage payments or other responsibilities simply stop while probate is being obtained.
What if several people inherit the house?
A property is often left to more than one beneficiary; this is normally the case when a parent leaves their estate equally between their children. If everyone agrees that the property should be sold, the executors can proceed with the sale as part of the administration of the estate.
However, things will become more complicated if one beneficiary wants to keep the property. They may potentially be able to take the property as part of their inheritance or buy out the interests of the other beneficiaries, depending on the circumstances and agreement between those involved.
Where beneficiaries disagree about what should happen to the property, legal advice should be obtained before proceeding.
Preparing an inherited property for sale
An inherited property may have been empty for some time or require work before it is marketed. The executors remain responsible for looking after estate assets while the administration is ongoing. Appropriate insurance should therefore be maintained and the property kept secure.
You can also speak to local estate agents about whether carrying out repairs or improvements is worthwhile before marketing. It is not always necessary to renovate an inherited property extensively. Depending on its condition and the local market, selling it in its existing condition may be more practical.
Estate agents can provide valuations and advice about the likely sale price, but executors should remember that they are dealing with an asset belonging to the estate and should act appropriately when deciding what offer to accept.
What happens once a buyer is found?
Once an offer has been accepted, the transaction proceeds through the conveyancing process. The buyer’s solicitor will investigate the title, carry out searches and raise enquiries about the property.
AFG Law’s Residential Property team can respond to those enquiries, deal with any title issues and liaise with the buyer’s solicitor throughout the transaction.
Inherited properties can sometimes raise enquiries that the executor cannot answer personally because they have never lived there. This is not unusual. Executors should answer property information questions based on what they genuinely know rather than guessing about the history or condition of the house.
Your conveyancer can advise on how enquiries should be dealt with where information is unavailable.
Exchange and completion
Once the buyer has completed their investigations, any mortgage arrangements are in place and the parties are ready to proceed, contracts can be exchanged. At exchange, the sale becomes legally binding and a completion date is agreed.
On completion, the buyer pays the balance of the purchase money and ownership of the property transfers. Your conveyancing solicitor will deal with any mortgage or other sums that need to be discharged from the proceeds before sending the net sale proceeds to the estate.
The executors can then continue with the administration of the estate and the distribution of assets to the beneficiaries when appropriate.
Is there tax to pay on an inherited property?
Tax should still be considered, but it is separate from the day-to-day conveyancing process.
You do not normally pay Stamp Duty simply because you inherit a property. There may, however, be Inheritance Tax to consider as part of the wider estate.
Depending on the circumstances, the available allowances can include the standard nil-rate band and potentially the residence nil rate band where the relevant conditions are satisfied. Rules can also apply to transfers between a spouse or civil partner, including the potential transfer of unused allowances between qualifying spouses and civil partners.
Capital Gains Tax can become relevant if the property’s value increases between the date of death and its subsequent sale. If there is Capital Gains Tax on inherited property to pay, reporting and payment requirements can apply, including the 60 days of completion deadline for relevant UK residential property disposals.
Whether you actually pay Capital Gains Tax depends on the circumstances. Matters such as Private Residence Relief can also be relevant where a beneficiary has occupied the property as their home.
Simply inheriting a property does not itself create an Income Tax charge, although Income Tax can become relevant if the property is retained and rented out.
If there are significant potential tax implications, specialist tax advice should be obtained rather than allowing tax considerations to delay the conveyancing unnecessarily.
Should I instruct a conveyancer before probate is granted?
There can be a real benefit in instructing a conveyancing solicitor early. Waiting until probate has been granted and a buyer has been found before instructing a solicitor means that any title problems may only be discovered once the transaction is already underway.
Early title investigation can identify issues such as missing deeds, restrictions, an unregistered title, leasehold problems or discrepancies in the ownership records.
Where there is an issue, dealing with it early can put the estate in a much better position when a buyer is ready to proceed.
How AFG Law can help with selling an inherited property
Selling a property following a death can involve both estate administration and conveyancing, which means communication between the two areas is important.
AFG Law’s Private Client team can assist with probate and the administration of the estate, while our Residential Property team can handle the conveyancing when the property is sold.
We can check the Land Registry title, investigate unexpected ownership or title problems, prepare the sale documentation, deal with the buyer’s enquiries and take the transaction through exchange and completion.
If you are selling an inherited property, you do not necessarily need to wait until every aspect of the estate has been finalised before starting the conveyancing process.
Contact AFG Law to discuss the estate and how our Private Client and Residential Property teams can help you prepare an inherited property for sale and take the transaction through to completion.