Deceased Estate Property Valuation & Preparation for Rent or Sale

• Sole Ownership;
• Joint Tenants; and
• Tenants in Common.

17.1.1 Sole Ownership

If the deceased person was the sole owner of the home or other property, then those properties will generally fall within the Estate and will be distributed as outlined in the Will or based on legislation in your state/territory.

17.1.2 Joint Tenants

If the deceased person owned the home or other real estate with another person jointly, then those properties will, in most cases, not form part of the Deceased Estate as they transfer to the surviving joint tenant. Further instructions may be noted in the Will.

Refer to Step 30.6 – Deceased Estate Transfer of Property (Real Estate) to find out how to transfer property to the surviving joint tenant.

Note: Where both joint tenants have passed, those properties will generally fall within the Estate.

17.1.3 Tenants in Common

If the deceased person owned the home or other property with another person in common, then the portion owned by the deceased person generally falls within the Estate and will be distributed as outlined in the Will or based on legislation.

If the home or other real estate owned by the deceased is still mortgaged at the time of death, then the mortgage for the property will also be transferred to the Beneficiaries with the property.

The mortgaging bank will, in most instances, have the right to expect all moneys owed. This means that if the property is sold and cannot cover the outstanding mortgage, then other assets need to be sold to repay the mortgage in full (see Step 14.4 – What Are Creditors).

The deceased may have mortgage protection insurance in place that covers the mortgage payments in case the insured dies (see Step 25 – Claiming Life Insurance & Other Benefits).

The Will may contain specific details and instructions on the distribution of the home and other real estate. The requests in the Will should be upheld to the extent that the law permits according to real estate Probate.

Note: Where no Will is in place, the Deceased Estate property will be dealt with as part of the intestate Estate and distributed per intestacy rules.

As with all assets and liabilities of the Estate, you will need to get a good understanding of the property value for the purposes of tax, Grant of Probate application and final distribution. A general rule is to either get a paid Deceased Estate property valuation by an independent specialist valuer, or free appraisals by three different real estate agents to allow you to arrive at an average value.

In cases where the property will ultimately be sold, Deceased Estate valuations may be less important (despite being a good guide as to what to expect when sold) as the final sales price will determine how much money will contribute towards the total Estate value. However, where a property is to be distributed to a Beneficiary, the Probate valuation may be of greater importance to other Beneficiaries for an equitable and fair distribution.

If you foresee that the value of the property may be a contentious topic among Beneficiaries and it may be difficult to arrive at an agreed value from the free appraisals, a professional property valuation for Deceased Estate purposes is recommended.

Note: The value of all assets and liabilities are as at the date of death, unless sold in which case the sale proceeds are considered the market value at that date.

It may seem a good idea for the Executor to be renting out a Deceased Estate property to generate income during the administration process. However, based on legislation, the Executors or Administrators can only enter into rental agreements upon receipt of a Grant of Probate or Letters of Administration (see Step 27 – Grant of Probate Application or Applying for Letters of Administration).

If the Deceased Estate property is already rented out to tenants, the lease agreement continues between the tenant and the Executors or Administrators.

Should you need to terminate the current lease agreement, you will need to provide notice in the appropriate period as outlined in the lease agreement.

In case a lease agreement comes to an end during the Estate Administration process and the tenant requests their bond to be returned, you or the letting agent need to contact the relevant authority in your state as follows:

It is not uncommon that the Executor or Administrator either require to or wish to initiate the sale of real estate during the administration process. It needs to be noted that final transfer of title and land can only occur once a Grant of Probate or Letters of Administration are obtained from the Supreme Court (see Step 27).

• the Executors or Administrators are listed as the vendors; and
• special conditions are added to clarify that:
  – the buyer is aware of the property being sold by Executors or Administrators;
  – the sale is conditional on the Grant of Probate or Letters of Administration being granted by a specific date (Note: Grant of Probate applications can take multiple weeks or months depending on complexity); and
  – the settlement of the property will take place within a specific period after the Grant of Probate or Letters of Administration being issued.

If the Grant of Probate or Letters of Administration are not obtained within the specific time frames, the buyer has the right to exit from the contract.

Can a Beneficiary of the Estate stop the sale of a property of the deceased?

The answer to this question generally depends on the circumstances of the specific case. Normally, once the Testator's Will has been proven (probated) and the Executor has been granted authority to administer the Estate, the Executor has the authority to manage the Estate in accordance with the terms of the Will.

If the Will grants the Executor the power to sell Estate property, Beneficiaries usually cannot stop the sale. However, Beneficiaries can potentially challenge the sale in court if they believe the Executor is acting in bad faith, or contrary to the best interests of the Estate, or against the terms of the Will.

Can you sell a property before Probate is granted in New South Wales (NSW)?

Generally, wherever you are in Australia, you cannot sell a property before Probate is granted. The reason is that the legal title of the property needs to be transferred to the new owner, and this usually requires the Executor of the Estate to act.

The Executor cannot legally sell Deceased Estate property (e.g., selling a Deceased Estate house) until they have been officially recognised as such by the court, and this happens only when Probate is granted. Grant of Probate provides the Executor legal authority to deal with the deceased person's assets, including selling off property.

Refer to Step 30.6 – Deceased Estate Transfer of Property (Real Estate) for detailed instructions on how to transfer property to the Estate for sale.