When selling the home of a Tenant in Common* who has passed away, it’s wise to factor in extra settlement time to allow for Probate or Letters of Administration to be granted.
If the deceased left a will, the executor of the will needs to be granted Probate before the Transfer of Land can be completed.
If the deceased did not leave a will, a family member or spouse needs to apply for Letters of Administration before the Transfer of Land can be completed. Letters of Administration perform a similar function to Probate, but applying for them is a more complex process that takes longer and usually involves a lawyer.
Applications for probate and Letters of Administration can take 3-6 weeks to process through the Supreme Court – provided the application is correct. If the seller does not use a lawyer to apply for Letters of Administration, extra time may be needed to allow for potential mistakes in the application.
This 3-6 weeks+ time frame could potentially lead to settlement delays and penalty interest for the seller.
To reduce the risk of delays, I recommend sellers in this situation apply for Probate or Letters of Administration in a timely manner. If Probate or Letters of Administration haven’t been granted, include a condition on the contract stating that the sale is subject to the granting of Probate or Letters of Administration**. I suggest settlement date be set at least 21 days from finance approval or granting of Probate/Letters of Administration, whichever is later.
By doing so, you ensure that Probate or Letters of Administration are granted before settlement is scheduled to occur – paving the way for a smooth settlement for all involved.
* The information in this article also applies to a sole owner who has passed away. For information regarding the death of a Joint Tenant, see How the death of a Joint Tenant affects settlement.
** This does not constitute legal advice. For specific advice on writing contracts, please consult a legal professional.
Image by Kevin Saff via Flickr.