I believe that relationships are more important than transactions I started a career in real estate in 2006, and since that time I have built a Regina real estate business around that philosophy. My goal is a personalized one-on-one service to fully understand you, and your real estate goals and to be 100% accountable to you. In my latest blog post, I explain the process of selling the home of a family member who has passed.
What Is The Process Involved When Selling The Home Of A Deceased Family Member?
Unfortunately, I am all too aware that the death of a relative is always a hard time for the family left behind. Not only do you have to navigate the emotional turmoil that is present when someone you love passes, but you may also have to deal with the inevitable real-world details – like liquidating assets and maybe even selling that person's home.
- The Importance Of An Up To Date Will
If you think their properties will automatically pass to their descendants when they die, you could be in for an unpleasant surprise. If a homeowner dies without a will, or with a will that somehow fails to specify who the deceased’s property is meant for, what happens to the home becomes a provincial decision. Saskatchewan Law
Each province has its own formula for distributing the deceased’s assets that takes priority over the dead person’s wishes.
When a person dies intestate, typically the family will act as administrator of the estate. Section 11 of The Administration of Estates Act lists the persons entitled to apply for Letters of Administration:
- spouse; children & grandchildren
- parents;
- siblings; nephews and nieces;
- next of kin of equal degree of consanguinity;
- creditors; and the official administrator.
Letters of Administration may not be required to deal with assets that are not part of the estate (Part II Assets) such as property jointly owned with the deceased at the date of death, assets with a named beneficiary or assets outside Saskatchewan. Letters of Administration will be required if the estate assets include real estate in order to conduct any land transactions with Information Service Corporation.
Selling a home after a relative dies is what’s known as an “estate sale.”
The term “estate sale” can often be interpreted in different ways. For instance, if you are not a Realtor, you might be thinking that an estate sale is an auction where furniture and other possessions are liquidated.
Most real estate agents, on the other hand, think of an estate sale as selling a property for one of the heirs.
2. Transference of real estate after death.
So what happens when the home is going to be sold?
The first thing that needs to be done is to ensure the executor has been given authority to liquidate the real estate. There should be specific instructions in the will about selling the property.
First, look to see if the executor under the will was given power or authority over the real estate. If they were not given authority over the real estate, then the beneficiaries hold the authority and can sell the real estate without the executor’s consent.
Important note:
If you are going to be selling an estate where there are more debts than assets, this is what’s called being insolvent. If this is your situation it is important NOT to pay any debts you don’t have to— If you pay some low-priority creditors, you could find you are personally liable for the amount you shouldn’t have paid out. For example, don’t pay the landscaper or the telephone bill. These should be paid by the executor once approved.
3. What Happens If there Is a Mortgage Outstanding?
A majority of Canadian homeowners don’t know what happens to their mortgages when they die. Only 28 percent of respondents to a 2021 survey realize that their mortgage needs to be paid by the beneficiary who receives their properties. It does not disappear, unfortunately, although that’s exactly what 12 percent of survey respondents think happens to a mortgage when a borrower dies.
Property owners, particularly investors, must also keep in mind the tax bills awaiting their surviving family members. The CRA treats a dead individual’s assets as if they were all sold on the day prior to his death, meaning capital gains taxes on non-primary residents need to be paid – even if the home is left to a beneficiary. Joint ownership of a property with a spouse can provide a clean and legal workaround; otherwise, those left behind will need to foot the bill.
4. Collect all the necessary documents related to the home.
One of the least enjoyable, but most necessary, things that those left behind need to do is collect all required financial documents. Financial documents are essential for the distribution of the estate, including the home. Without all the necessary documents things become much more complicated.
You may have to search for a while to find everything you need. Often all documents won’t be in the same place. Sometimes people will stash them in hidden places. It is worth the time to search everywhere, including crawl spaces, the attic, and the garage, go through all the boxes and files, and even look under the mattress and drawers.
The documents you will want to gather may include:
- Will – As explained - If there is a will, it will significantly simplify the distribution of the estate.
- Receipts from bills – You will need to freeze your relative’s credit and contact all creditors, including the three major credit reporting agencies.
- Investment documents – Your relative may have had stocks and/or bonds.
- Insurance documents – There may be a policy from an employer, or one purchased privately.
- Homeowner’s policy – Keep homeowner’s insurance up to date and increase coverage if necessary.
- Bank account documentation – You want accurate information on all of your relative’s bank accounts.
- Personal documents – If your relative had any personal documents, like journals, poetry, etc., you might like to have them at a later date for sentimental reasons.
Once you have gathered all the documents you know, you will need, shred everything else that has personal information on it. It is a common thing for identity thieves to use the social security numbers of the deceased. By eliminating all documents with the number on it, you make identity theft more difficult.
4. Change The Locks and Mail Delivery
When selling a home as an estate sale, it is essential you have complete control of the property. This includes changing the mail, so you receive it in a timely fashion, along with enhancing the home’s security. Keep in mind there are going to be folks who know about the death that took place and the fact the home may be vacant.
You will be surprised how many keys have been given out on a property over the years. Whether it is friends, relatives, the babysitter or various contractors who have done work. It is better to be safe than sorry.
5. Hire a Regina Realtor To Help You Get the Home Ready For Market
After you have processed all the personal possessions of your relative, you will be ready for the actual sale. At this point, you will go through much the same steps as any other home seller – although some minor differences may apply.
I have found that often when selling a home that was owned by an older relative, or a house that has been occupied for decades, there is extra work involved in prepping for sale. This can be one of the most challenging parts of selling a deceased parent's home.
The house may be quite dated, including old wallpaper, decorations, carpet, paint, etc. It may also have damage that has gone unaddressed for a long time.
An experienced and reputable real estate agent will provide the best advice on what needs to be changed or repaired before you put the home on the market. If you want to get the best possible price, you may need to make some changes. The most common I see include:
- Getting rid of old furniture/ window coverings
- Removing wallpaper
- Changing dated flooring and/or refinishing hardwood floors
- Applying a fresh coat of paint
- Eliminating all signs of pet ownership, like stains and other damage
- Installing new fixtures and updating lighting
In addition to any changes you make to the home, you are going to want to clean it thoroughly. There is nothing more critical to the sale of a home than a proper cleaning. I may also suggest professionally staging the property if there is not enough appropriate furniture/belongings left after the clean-up.
Once the home is prepared for buyers, then we can go ahead and list it. As long as you have made the home desirable based on the current Regina and Rea Real estate market, you should be able to sell it for a fair price.
In Conclusion.
A misunderstanding of what happens to a person’s property once they’ve died can cause extreme distress, both financial and emotional, for her surviving family members. So the best advice I can give is to have your will and paperwork in order as soon as you become a homeowner. In addition, you review your will on a regular basis to ensure it reflects your wishes.
Have Questions about selling a home of a deceased family member? Contact me today, I am here to help!
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