Yikes, being named the executor of a loved one’s estate is an overwhelming prospect. You’re likely asking yourself, “Now what?” Where do you even begin? But don’t worry, we’ve got you! Consider this your “Everything You Need To Know About Being An Executor Guide” to get a better understanding of your role when it comes to real estate.
What are the Duties of an Executor?
As an executor your responsibilities can be slightly scary ranging from confirming the location of the will to “probating the estate” and payment of debts and taxes (from the deceased’s accounts) to funeral arrangements. Looking specifically at real estate property, your role is to manage the following:
- Having them appraised
- Helping to maintain the property value until sold, such as making sure it doesn’t fall into disrepair or avoiding accidents like burst pipes in the winter
- Sorting through and when necessary, appraising all the items in the home
- Ensuring all the items in the home go to the appropriate beneficiaries if mentioned in the will
- Making sure the property is insured
- Dealing with rent from investment properties
- Selling the property for a fair market price
- Acting in the best interest of the beneficiaries and being as neutral as Switzerland to ensure everyone is treated fairly
- Managing the sale of the property within a year (typically)
Dealing with Beneficiary Conflicts as Executor
This is where the drama might come in. We’re talking potentially “Succession” level in-fighting. It’s not uncommon to find the views on what should happen to the property are not all shared equally among the beneficiaries. Some might want to sell ASAP, while others need time to grieve and deal with their emotional attachments to the home. Some might want to hold onto the property as an investment allowing it to build equity, or use it as a rental property, while others are insisting on selling to get their share of the profits now. One person might offer to purchase the property from their fellow beneficiaries but expect to pay an unfairly low price “robbing” the others of their full inheritance in relation to the property value.
Don’t worry, you aren’t expected to resolve these conflicts. If the disputes come to a stalemate, you can enlist the services of a mediator to decide the best way to proceed. And, if one or more of the beneficiaries want to buy the others out? The sale price is based on the “fair market price” rule to ensure those selling get the full value of their inheritance.
Whether you’re selling a home on behalf of yourself or a loved one, here are some more blogs to answer all your selling questions:
- Is it a Good Idea to Hire a Friend to Sell Your Home?
- Can Staging a Home to Sell Really Increase the Sales Price?
- What Does Due Diligence Mean in Real Estate?
What’s the Difference Between an Heir/Beneficiary and an Executor?
An executor is a trustee who is given the property in trust. This does not mean you now own the property, but instead you’re now responsible for administering the estate and ensuring it is properly distributed to the beneficiaries. The beneficiaries are the ones who own the estate based on whatever was left to them in the will. This is not to say you can’t also be a beneficiary, it just means being an executor does not automatically mean you are.
Then What’s the Difference Between an Executor and Power of Attorney?
As an executor you help someone carry out their wishes when they die, while as a power of attorney (POA), you’re authorized to make decisions regarding their estate while they’re alive.
Dealing with Real Estate as an Executor
If you’re left to sell the property as an Executor, it’s not as straightforward as selling your own home. Here are the steps involved:
Step 1: Speak to a lawyer
A lawyer will ensure you’re carrying out your duties as an executor without raising any questions among the beneficiaries. They should be experienced in real estate and estate law to guide you through the steps while also protecting the rights of the beneficiaries. Their job is to check every detail so that should anyone question your actions, you’re all clear and on the up and up.
Step 2: Letters of Administration (Probate)
Also known as probate, this is a legal process that basically proves the will is valid in court. You can’t do anything with the property until the Letters of Administration are filed and approved which transfers the title of the property to you temporarily.
You’ll need to obtain “Letters of Administration” giving you authority to sell the home and sign all the legal documents related to the transaction. To apply to the court, you’ll need the following documents:
- The will if it exists
- Addition or supplements to the will
- Proof of death using a death certificate
- Court forms
A lawyer can help you complete the forms and ensure everything is in order. You can then file the documents with the Superior Court of Justice in the county or district where the deceased lived at the time of their death OR the court location where they owned Ontario property if they did not die in Ontario. Once you receive your Certificate of Appointment of Estate Trustee, you have the authority to sell the property.
Step 3: Gather documentation
It can take a while for your certificate to go through, providing time to put together the information your real estate lawyer will need, including:
- The deceased’s property tax information
- The property roll number
- The total amount of the most recent property tax bill
- Whether the property taxes have been fully paid or are in arrears
- Rental equipment tied to the home such as water heaters, propane tanks, HVAC equipment, etc. (rental providers usually put a tag on their equipment with their contact info)
- For condos, the status of common expenses payments and any unpaid special assessment fees against the unit
If you can’t find the property tax info, your lawyer will have to request a tax certificate from the city. This comes with a fee. For condo information, speak to the Condo Corporation via the board or property manager. If the property has rental equipment, call the provider to check the status of the account.
Step 4: Speak to a real estate agent
Speaking to a real estate agent will help clarify the process. It’s our job and area of expertise to ensure you receive the best value for the property regardless of whether it’s the primary home, an investment property, or a secondary home like a cottage. We will:
- Assess the property to ensure you list it at the best possible price for the beneficiaries
- Advise you on how to prepare the home for listing based on our assessment such as making repairs, staging, decluttering, etc.
- List the home using the most appropriate pricing strategy based on the current market in the area
- Prepare a comprehensive marketing plan to find the right buyer
- Accept offers and negotiate on behalf of your beneficiaries to get the best price
We’ve been through this many times and can help you get a fair deal. We’ll also juggle complications such as less than optimum timelines that tend to cause stress when mortgages, taxes, and expenses need to be paid from a dwindling estate. As your neutral support system, we help manage things when emotions run high. It’s tough working with grieving beneficiaries who have strong connections to a property they might not want to sell, yet know they have to sell. We can help explain the legalities and your role in ensuring the wishes of their loved ones are carried out to ease stress and help keep everyone focused on the same goals.
How do you choose the best Toronto real estate team to sell your loved ones home? Here are resources to help:
- 10 Tips for Finding the Best Toronto Real Estate Team for You
- Why You Don’t Have to Settle for Low Ball “We Buy Homes” Offers, No Matter How Bad Your Home Looks
- Are Discount Real Estate Agents Worth the Risk?
Wait, What If the Will is Contested?
We won’t go too deep into this because, well, we’re not lawyers! BUT, briefly, contesting a will means that someone is questioning the validity of the will. In Ontario, that usually has something to do with one of the following:
- Concerns about fraud
- What the person questioning the will feels were unclear intentions of the deceased
- Unwarranted influence by the executor or others mentioned in the will
- The deceased lacked the capacity to make a will
- There were no witnesses at the time the will was made and signed
- The will lacks conditions for the legal spouse or their dependents
Now, only people with a financial interest in the estate or who were financially dependent on the diseased such as spouses and dependents can make claims against the estate. If the estate is contested, it delays probate until the will is confirmed to be legit.
Can an Executor List a Home Before Probate?
The simple answer is yes. Although you need to get that certificate for things to go smoothly, because the time for grant of probate typically takes 6 to 8 weeks (when you aren’t faced with motions or objections and have filled out all the paperwork correctly, that is) you might find the beneficiaries are anxious to get the ball rolling.
Just keep in mind listing a property before you attain probate can get complicated. For example, if you accept an offer and you don’t attain probate before the agreed-upon closing date, then you need to come up with a way to resolve the issue. This process can go smoothly or open a can of worms.
Pros and Cons of Listing Before Probate
Let’s look at the pros and cons of listing a home before probate:
- You can help sell the home faster
- You might be able to take advantage of selling at a better time of year than waiting (i.e. it’s spring and waiting would put you in a less than optimum time when buyers are less active)
- You might avoid complaints from the beneficiaries if they are anxious to sell
- You might not have probate in time for the closing date
- You might have trouble finding a buyer if you include a contingency in the Agreement of Purchase and Sale that the closing date is subject to obtaining probate
- You might end up in a less than desirable season to sell
Oh! Oh! I Have a Signed Agreement But No Probate!
If probate doesn’t go through before the closing date you have three ways for the transaction to proceed:
- The buyer and seller agree to amend the closing date until probate is obtained: This can work, but most buyers are selling another property, or are at the end of their lease which means they have nowhere to live.
- The buyer and seller enter into an escrow agreement: In this case the buyer can move in based on the closing date but won’t become the legal owner until the probate goes through.
- Rental agreement: The buyer agrees to live in the home, taking on the financial responsibility to pay property taxes, utilities, and renter’s insurance, along with rent to the beneficiaries equal to the current mortgage payments until probate is completed.
Dealing with Real Estate as a Power of Attorney
Now, if you’re working on the behalf of a loved one as a POA, that means they’re still living but unable to deal with the process on their own. This tends to be easier than acting as executor as you have the legalities out of the way, so you can sell much like selling your own home. Our advice is treating the sale as your own, instead of trying to sell the property “as is” just to get it over and done with. We get it, you’re busy. But this doesn’t work in the best interests of your loved one. Instead reach out to us and we can help manage the same things we do for an executor, so your sale goes through with as little stress as possible. It’s worth the effort to see the best profits for your loved one who has placed their trust in you!
Phew! It’s a lot to take in. But having a local real estate agent in your corner will give you time to deal with your grief, neutralize disagreements among beneficiaries, and ensure you obtain the most value for the property for all those involved.
Call The Christine Cowern Team at 416.291.7372 or email us at email@example.com with any questions you have about selling as an executor or to set up a call or free home assessment. We’d love to work with you!