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Taking the scary out of deceased estates

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Buying a property after the previous owner has died has advantages and disadvantages.

While the heirs might not be as emotionally attached to the property, and therefore willing to accept a lower offer to hasten the winding up of the estate, the process can be long because of legal hurdles.

Purchasing a deceased estate can sometimes be a lengthy and complicated process, with a few extra challenges along the way. Believing they will get a property at a lower price, however, is why many buyers are willing to embark on this journey. Before going this route, buyers should know what to expect as the process is not the same as in a regular property sale.

Refqah Fataar Ho-Yee, a director at STBB, says the executor of a deceased estate steps into the shoes of the late owner to administer the estate as soon as his letters of executorship are issued by the Master of the High Court. One of the administration steps is to attend to any immovable property.

“The executor may be directed by the terms of the deceased’s will to sell the property, or the heirs may jointly agree that the executor may sell the property, rather than them taking transfer of the inherited property.” The property may also need to be sold for financial reasons, such as to settle the deceased’s debts or to fulfil terms of a divorce order that was not attended to, she says.

For buyers specifically interested in purchasing such a property, says Eduan Milner of Eduan Milner Attorneys, Notaries and Conveyancers, there is no central data point where one can establish whether an estate has immovable property for sale. “All estates get reported to, and are dealt with, by the Master’s office, but the Master’s office will not – or should not – allow you access to an estate file unless you have an interest in the estate as a beneficiary or a creditor.”

Where does one find deceased estates for sale?

“Peruse the advertisements in the local newspapers on a Friday, where advertisements need to be placed to convey certain information to the public regarding an estate,” Milner says. When an executor receives his letters of appointment from the Master’s office, the first thing he does is place an advert, on a Friday, in the Government Gazette as well as a local newspaper where the deceased lived, advising any possible creditors that might have claims against the deceased to contact the executor.

Interested parties can contact the executor to ascertain whether there is any property in the estate and whether it will be sold. In some cases the property is bequeathed to a beneficiary and will not be placed on sale. “You can also peruse the Government Gazette online, which will give you the same information, but for other parts of the country as well. It is important to respond to this specific advertisement which is commonly referred to as ‘the advertisement for creditors’ as that is the first step in the winding-up process of an estate.

Picture: Toa Heftiba/Unsplash

Who handles the sales of immovable property in deceased estates?

The executor of the estate acts like a normal seller and instructs an agent or auctioneer to market and sell the property, or may even sell it privately if a buyer approaches him or her directly, says Ho-Yee. Once sold by whichever manner, the signed agreement of sale is handed to a conveyancer to attend to the property transfer. 

“Often laypersons who are appointed as executors appoint attorneys to act on their behalf to administer the estates and generally that same attorney or firm attends to the property transfer.”

Is there any difference in terms of selling price between a deceased estate and a similar property on the market?

While Ho-Yee says there is no difference in property value or sales price, Milner says you usually find a property in an estate can be bought for “slightly cheaper” than a property bought from an ordinary seller.

However, this price will still be market-related. “The reason for that is that there are different factors at play in the estate scenario. When you sell your property you have a specific price in mind. You know what improvements you made to the property and you also know what proceeds you require from the sale to settle your bond or perhaps buy a new property. Very often, there is also a bit of emotion involved.”

With an estate, however, one will usually find that the beneficiaries do not have those same concerns or objectives. “It wasn’t their property to start with, so you could really not expect them to feel the same way about that property as they would about their own property. You might also find that they are very eager to have the process of the winding up of the estate finalised as soon as possible and often they will settle at a reasonable offer instead of waiting for possible higher offers.”

Purchasing a property from a deceased estate

If the property is marketed and sold by the executor Milner says you should contact them and find out whether they have an attorney they want you to deal with. “Once an agreement is reached on the essential terms, the executor’s attorney will draft a contract that the parties will then sign. However, the earlier you can get hold of the executor the better. If you can have a written offer on the table, drafted by your attorney, before anyone else, it will be to your advantage.” 

He adds that while it is the seller’s prerogative to appoint the transferring attorney, a buyer can ask whether their attorney can attend to the transfer. “If the executor uses an estate agent to market and sell the property, you will obviously work through the estate agent in the usual manner.” The sales process Ho-Yee says the same process is followed as when one purchases from a living person.

However, in cases where the late owner co-owned the property with a spouse or a co-investor, there will be two sellers involved, namely the executor and the surviving co-owner. The biggest difference when a purchaser buys property owned or co-owned by a deceased estate is that the sale is always subject to the endorsement of the sale by the Master of the High Court.

“What this entails is that after the agreement of sale is signed and accepted by the seller/s, all the estate heirs entitled to the proceeds of that sale must sign a formal written consent to the sale and all its terms.” Furthermore, all the heirs must give consent for the sale to proceed, not a majority as some people believe and hope.

Obtaining this consent and then ensuring that the Master’s endorsement stamp is on the power of attorney, which is one of the documents lodged at the Deeds Office, adds a month or so on to the standard transfer process. As each estate has its own family dynamics (in addition to current lockdown delays), that month delay can be extended, Ho-Yee says.

Advantages

Milner says the main advantage of buying an asset from a deceased estate, whether it is a house, motor vehicle, furniture or any other asset, is the “very realistic” expectation that you could get it for a better price.

Disadvantages

A purchaser has to be mindful of the procedural and unknown delays that arise when dealing with a deceased estate and those lengthen the standard transfer process, Ho-Yee says. They should also be aware that further delays will arise if an heir decides not to consent to the sale.

“Purchasers should also inspect a deceased estate property thoroughly before putting in offers, as the seller who knew the property best and could have disclosed any defects on the condition report/disclosure annexure to the agreement of sale, has passed away.

“The executor usually is unfamiliar with the property and its condition.” If a property is being sold quite some time after the owner’s death, she says it is best to make inquiries or request a condition report from the current occupants if possible.

Similarly, Milner says buyers of these properties must bear in mind that they tend to be slightly older than other properties on the market. “The deceased might have stayed in the property for the past 30 to 40 years, so take extra care when inspecting the property for defects.”

Ho-Yee adds: “Purchasers should also ask who the current occupants are of a deceased property being sold. Evicting difficult tenants is one thing, but trying to evict relatives or heirs is quite a nightmare, which can prove costly to the estate or purchaser if the purchaser foolishly agrees to attend to such eviction, which could drag on for many months.”

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