A Guide To Selling a Property That Isn't Yours
Lasting Power of Attorney or an inherited property, we guide you ...
Selling a home on behalf of another person is not as straightforward as selling your own home. Whether that person is still alive or has passed on, there are a number of legal steps you will need to take before you can proceed with a sale.
Fortunately, there is plenty of advice out there to guide you, with Government websites walking you step by step through many of the processes.
In this article, we’ll take a look at how to proceed with selling a house for someone else, and what you are required to do, by law, under different circumstances.
Selling a house on behalf of someone who is still alive
Sometimes you may be tasked with selling a house to pay for nursing home or retirement village fees. Your parents, elderly relatives or friends may no longer be able to care for themselves, and they may need to sell their home to fund their care.
If their deteriorating health, such as a lack of mental capacity restricts their ability to manage their own property sale, or they are unable to do so from their nursing home, then they can ask you to manage their affairs on their behalf. This can include managing their finances and selling their property.
This can often be a challenging time, as the property in question may be your former family home where you and your siblings grew up.
Lasting Power of Attorney
In order to act on their behalf, you will need a Lasting Power of Attorney (LPA). There are two types of LPA: a health and welfare LPA, which allows you to make healthcare decisions on their behalf, and a property and financial affairs LPA, which gives you the right to manage their money and sell their home.
A Lasting Power of Attorney needs to be made while the person is still of sound mind and able to reasonably understand what they are doing. One or more people can be appointed, and they can either be required to make decisions together or be empowered to act individually. Attorneys can be anyone, whether a relative or not, but they must be over 18.
How to apply for a LPA
You can download the forms for appointing and registering a LPA online at the Government website. These legal document forms will need to be signed by all parties and witnessed. They also need to be signed by a certificate provider, who confirms that the person granting the LPA understands what they are doing and are making the LPA of their own free will. The documents must then be registered, which can take between 8 and 10 weeks. It costs £82 to register a LPA, but there are reductions and exemptions in certain circumstances
Once the LPA has been registered, you are free to sell any property belonging to the person you are representing, including their home. You do not need their permission, although you should always seek this if possible to avoid any misunderstandings.
Despite the name, a Lasting Power of Attorney does not, in fact, last. It ceases to be effective on the death of the person who agreed it, and so it cannot be used to sell the home of the person after they have died. Selling the home of someone who has died requires a different legal process altogether.
Selling the home of a deceased person
According to the Daily Telegraph, as many as 10% of homes on the market at any one time are the former home of someone who has died. To sell the home of a deceased person you will need to follow a number of legal steps and the Land Registry offers a guide to how to deal with property when someone has died. How you proceed will depend on whether or not the person left a will, however in either case, you will still need to apply for probate before you can sell their home.
The person who manages the affairs of a deceased person, usually at least one close family member, is called their personal representative. If you have been named in a will, then you are known as an Executor, and will need to apply for a Grant of Probate before you can start selling a property following a death. If no will exists, then the Personal Representative is known as an Administrator and will need to apply for Letters of Administration before a home sale can take place.
Applying for Probate
Before you can apply for probate (or letters of administration) you will need to estimate and report the value of the deceased person’s estate for inheritance tax purposes. The threshold is currently £325,000 for an individual and £650,000 for a couple. You may even have to pay some of the tax that is due before probate is granted.
To apply for probate, you will need various documents, including the will and the death certificate. The Government probate website will take you through the application process. If no tax is due, then probate may be granted in as little as six weeks, whereas probate for taxable estates can take twice as long.
Waiting for probate
You cannot sell a home without being granted probate (or letters of administration), however you can put it on the market to get the sales process moving. Even if you find a buyer quickly, you will still need to wait until you have been granted probate before you can complete the sale.
In the meantime, it is important to make sure that the property is insured and protected. Most home insurance will not cover a property that is empty for more than 30 days, so you will need to arrange separate insurance. You may also want to periodically heat and air the property to stop it getting stale or damp, which could put off potential buyers.
It is important to check that there are no third parties with a financial interest in the property, such as a mortgage lender or equity release company, and that there is no charge on the property from the local authority to cover care bills.
You should keep careful records of everything you do, in case your decisions or actions are ever challenged by fellow beneficiaries, creditors or the tax authorities.
Selling a probate property
As an executor, or administrator, you are obliged to sell the property at the open market value if there are other beneficiaries to the will. To make sure that you have an accurate figure, you will need to get three separate valuations from local agents and average these out. If you sell for significantly less than the open market price, you may face legal action from other beneficiaries to recover their share of the difference.
However, if you are the sole beneficiary of the inherited property, or you share the will with siblings or others, you can sell the property for less than the market price in order to achieve a quicker sale and get access to your inheritance sooner, as long as all parties agree to this process.
A professional service when you need it most
With prompt, professional property purchasers such as Yes! Homebuyers, you could achieve a sale within a week of gaining probate, allowing all parties to move on with their lives without the constant reminder of their parent or relative’s passing.
A prompt, professional sale can also save you from the heartache of showing viewers around your former family home. Returning to a deceased parent or relative’s home so soon after their passing can feel very raw and painful, and the reduced selling price on offer may be worth it to avoid having to go through this.
It is important to note that any inheritance tax will be charged on the value of the inherited property, and not on the eventual sale price, and so you cannot use this process to bring the estate below the threshold and avoid inheritance tax.
Take legal advice
Whether you are selling someone else’s home while they are still alive, or selling the home of a deceased person, it is always best to get legal advice to be sure you are acting correctly. If you make a mistake in your own home sale, then it is only you that loses out, but if you make a mistake in selling property for someone else, and they or their beneficiaries lose out, you could face expensive legal challenges.