What Happens If Someone Dies Before Settlement of a Property?

When buying or selling a property, there are steps to take before the exchange and completion of a sale. You could ask what happens if one of the parties dies before settlement or completion of a sale.

There are several factors to consider when determining what happens to a property if the owner dies before settlement. The level at which the sale has progressed, whether contracts have been exchanged, how the property is owned, and whether the estate needs to go through probate.

When a person dies, they usually have a representative to deal on their behalf, such as an executor named in a Will or an administrator if the executor declines. Dealing with property transactions can become more complicated for the executor/administrator. There are contracts to review and deal with, mortgage arrangements to consider, registration of the property, and any debts outstanding. For a leasehold property, the length of the lease, service charges, and ground rent can also be relevant.

If a family member dies in Slough, for example, and the property is to be inherited, the family would need to deal with the deceased’s estate before deciding whether to retain, sell, or transfer the property. In this guide, we will focus on what happens when a person dies before completing a property transaction and the steps to take next.

What Happens to a Property When the Owner Dies Before Settlement?

A property transaction does not always end when one of the parties dies. The estate of the deceased person usually takes over the responsibilities associated with the sale. The executor or administrator usually has to establish what has already been agreed and what still needs to be done regarding the property.

The next step is usually to consider whether contracts have already been exchanged.

If the person had died before contracts were exchanged, the position would be different to if they had died after the contracts were exchanged. It could also depend on whether the person was a buyer or the seller.

The executor/administrator may need to consult with their solicitor to review the agreements and explain how the death affects the sale.

If the deceased owned the property, there may also need to be additional steps before the property can be sold or transferred.

What is Settlement of a Property?

In a property transaction, settlement, also known as completion, is the point when all legal formalities and payments have been finalised. It is at this point that the buyer pays the purchase price, and legal ownership is transferred to them. In England and Wales, the term used for settlement is completion.

Before completion, there may also be other contractual formalities to complete. If a party dies before completion, the sale may have to be continued as part of the deceased’s estate. It depends on what stage the sale had reached, whether contracts had already been exchanged, the nature of the property, and whether it was the buyer or seller that had died.

Therefore, the position is not as simple as presuming that the sale will end or continue as before one of the parties dies.

The deceased person’s solicitor or conveyancer should be able to explain the position depending on the agreements already reached.

Who Deals With the Property After the Owner Dies?

After a property owner dies, the estate has to be dealt with by their representative. This would either be an executor if one had been appointed by the Will or an administrator if there is no Will or if the executor declines.

The personal representative has the responsibility for dealing with the assets, liabilities, and affairs of the deceased person. This includes paying any debts due, then distributing the property to the rightful beneficiaries. However, it is important to note that an Executor does not have the right to benefit from the property unless specified. They only have the role of administering the Will and distributing the property lawfully.

When there is property involved, the executor/Administrator may also need to arrange for its sale, transfer, or other disposal. If it is a leasehold property, it may be necessary to have an understanding of the lease arrangement.

What is Probate After a Death?

Probate is one of the processes that come into play when dealing with a deceased person’s estate.

In general, it applies to those who own property in their sole name and whose bank accounts, property, or other assets require the personal representatives to deal with the assets before transferring them to the beneficiaries.

A Grant of Probate is usually applied for by the Executor named in the Will, and Letters of Administration are applied for when there is no Will. Grants of Probate are a formal legal document certifying that the Executor has the authority to deal with the Will and the estate of the deceased person. In relation to property, the Grant of Probate may be needed before other dealings such as sale or mortgage redraw can take place.

Does Every Estate Need Probate?

An estate does not always require a Grant of Probate or Letters of Administration. Some assets do not need to go through the process and can pass directly to the next of kin, such as joint assets.

It can depend on the asset type and how it was held. In relation to property, it should be noted that most banks and building societies require a Grant of Representation before they will release any funds to the personal representative.

Is Probate Required Before Inheriting Money or Property in the UK?

There is no set amount of money that qualifies for probate. People sometimes research how much money before probate is required in the UK, but the threshold varies according to the asset type and the organisation holding it. A financial institution will usually advise whether a Grant of Representation is needed to deal with the asset.

In relation to property, if an individual owned the property in their sole name, the personal representative will need the appropriate Grant of Representation to deal with the property. It can also depend on how the property was owned, so joint ownership and tenancy in common could be relevant factors to consider.

It can also help to distinguish between dealing with an estate and inheriting an asset. The Executor/Administrator has to deal with the estate before distributing any assets to the beneficiaries. If the property is leasehold, it may also be necessary to consider the service charges, ground rent, and lease extension.

What Happens If a Beneficiary Dies Before Inheritance?

Beneficiaries dying before inheritance can raise a number of issues.

The position can depend on whether the beneficiary had already become entitled to the asset and whether the person who made the Will (testator) had died before or after the beneficiary.

If a beneficiary dies after the testator, they may have already been entitled to the asset and their share may pass to their estate. The position can be more complicated if the beneficiary dies before the testator, depending on the type of gift and the relationship between the two. There are also specific rules within the Wills Act 1837 that can apply to children and other descendants who die before the testator.

The position can depend on the wording of the will, how close the beneficiary was to the testator, and the date on which the beneficiary died in relation to the testator. If the situation is not clear, it may be necessary to seek specialist legal advice on who is entitled to the asset.

Can Anyone Change a Will After Death?

An Executor cannot change a Will after the person who made it (testator) has died.

The Executor’s role is to deal with the estate in accordance with the Will and the law. An Executor may have to make some decisions while carrying out their role, but it does not mean they can decide to change the Will. There is a big difference between administering an estate and changing or revoking a Will.

However, it should also be noted that a beneficiary may be able to change a Will by agreement with the other beneficiaries by way of a deed of variation or other method. It is not the same as an Executor changing a Will, and specific rules apply for such changes.

Wills can also be contested in certain circumstances. Dispute resolution around Wills is a specialist area of law.

What Should You Do If Someone Dies Before Property Completion?

If someone dies before completion, the next of kin should take the following steps:

• ascertain the position of the sale, in terms of what progress has been made and how far the completion has been reached;
• identify who the representative is, such as an Executor or Administrator;
• contact the solicitor to discuss the contracts and how the sale should proceed;
• consider how the property is owned;
• establish if a Grant of Probate is required before completing the sale;
• review the property and its position, if it is leasehold;
• obtain further advice, if necessary, from a solicitor, conveyancer, or property expert.

How Long Does It Take to Inherit an Estate?

There isn’t a set period of time, as a simple estate may be dealt with quite quickly, whereas one with property and debts may take significantly longer to settle. Before any distribution can take place, the executor or administrator of the estate will normally have to identify the assets of the estate, deal with any liabilities, and obtain the relevant legal authority.

Dealing with property can add another layer of complexity to the process. There may be a need to value, transfer or sell the property, and there may also be conveyancing and Land Registry matters to deal with. This can take time, particularly if there are any mortgages, restrictions or other matters to deal with.

What can impact the timescale?

There are a number of factors that can affect the speed at which an estate will be settled, such as:

• Whether there is a valid Will
• Whether probate or an alternative grant is required
• The nature and volume of assets
• Any debts or liabilities
• Whether a property needs to be sold
• Whether beneficiaries are difficult to trace
• Any disputes or issues relating to the estate

For example, an inherited property may need to be repaired, insured, valued or put up for sale before the estate can be distributed.

Why can Inheriting Property take longer?

Property normally requires more administration as ownership has to be formally dealt with.

If the property was owned solely by the deceased, then the personal representative may have to deal with the grant, title, any mortgage or charge against the property and arrange for the property to be transferred and/or sold.

There can also be other matters to deal with before the property can be transferred. If the property is a leasehold property, then some of these might include checking the lease, contacting the managing agent, and finding out about service charge and ground rent matters.

HM Land Registry also requires different evidence to be provided when a registered property is transferred on the death of a person. The exact requirements will depend on the circumstances and how the property was owned.

What Happens to Power of Attorney After Death

A Power of Attorney and an executor serve very different purposes, and it is important to make that distinction after death.

A lasting power of attorney (LPA) enables an attorney to act on behalf of the person making the LPA whilst they are still alive. Once they die, the LPA lapses and the Office of the Public Guardian must be notified. This means that the attorney can no longer deal with the property of the deceased under the LPA.

After death, the responsibility lies with the appropriate personal representative, such as the executor in the Will or administrator under the relevant law, to deal with the property.

This can be particularly important if the property was being actively managed by an attorney for the deceased at the time of death. All further decision-making in relation to the property must be dealt with under the estate administration process.

What Happens to a Leasehold Property After the Owner Dies

A leasehold property doesn’t simply disappear when its owner does. The leasehold interest in the property will become part of the deceased person’s estate and will need to be dealt with by the estate administrator. In relation to the leasehold interest, the next steps will normally depend upon the nature of the ownership, the contents of the Will and whether there are any other interests in the property.

The personal representative may have to arrange for the property to be transferred or sold, once they have obtained the appropriate authority. If the property is inherited, then the beneficiary will receive the leasehold interest in the property and will need to ensure that they will be complying with the terms of the lease. This is particularly important as with a leasehold property you also inherit the rights and obligations in relation to the lease.

What Should the New Owner Check

Someone who has inherited a leasehold property should take some time to understand what they have inherited.

Things like the remaining length of the lease, ground rent and service charge can all have an impact on the value and ownership of the property. It’s worth looking into some of the key factors:

• Remaining lease term: How long is left on the lease?
• Ground rent: Is it payable, and are there any provisions in relation to changing it?
• Service charges: What is the amount, and are major works due?
• Lease restrictions: Are there any restrictions in relation to alterations, lettings or how the property can be used?
• Lease extension: Is the remaining term a consideration for a lease extension?

Does an Inherited Leasehold Property Need a Valuation

A professional valuation may be useful at a number of stages after inheriting a leasehold property. For example, when:

• deciding whether to keep or sell the property;
• working out how to divide up the estate;
• considering a lease extension;
• negotiating a property-related matter;
• dealing with a disagreement about value; or
• understanding the property’s current market position.

The value of a leasehold property isn’t just determined by its location and condition. The remaining lease term and the terms of the lease can also have a significant bearing on the value.

A professional valuation can give you an independent assessment based on the property and its specific circumstances, not just on an online valuation or an asking price.

Why does the Remaining Lease Term Matter

The length of the lease will have a bearing on the value of a leasehold property.

The shorter the lease becomes, the less attractive it can become to a buyer. It also has an impact on what the owner can do with the property.

The effect of this isn’t the same for every property; it can depend on location, market conditions, and the terms of the lease, as well as other factors. That is why it is a mistake to base any assumption solely on the lease term of a similar property.

Should You Consider a Lease Extension

Depending on the circumstances, an inherited property with a lease may eventually need to be extended. This could be if the lease is getting close to its expiry date.

The decision to extend will depend upon a number of factors, and the owner will need to decide whether it is appropriate based upon individual circumstances. They may need to consider the length of the lease, their intentions in relation to the property, the potential cost and the legal process involved. A solicitor can advise on the legal aspects of a lease extension and a suitably qualified surveyor on the valuation side.

It is important to remember that just because an inherited leasehold property exists doesn’t mean that an extension has to be undertaken. The same is true of a leasehold property that is inherited and is ready to be put on the market.

What Documents May Be Needed After Someone Dies

The documents that are needed will depend on the estate and what needs to be done with the property. However, it can help to make sure that you have the following documents to hand:

• Death certificate
• Will
• Grant of Probate or other relevant estate documents
• Property title
• Lease
• Service charge statements
• Ground rent information
• Existing valuation reports

In relation to a leasehold property, the lease is particularly important as it will set out the rights and obligations in relation to the property.

It can also be worthwhile obtaining recent service charge statements, any details of major servicing works and any correspondence with the freeholder or managing agent. The personal representative may need the documents when dealing with solicitors, the managing agent, freeholder, HM Land Registry or a property valuer.

The exact documents will depend upon what needs to be done with the estate and the property.

Frequently Asked Questions

What happens if someone dies before property settlement?

If someone dies before a property transaction is completed, then normally their estate becomes responsible for dealing with the person’s position in the transaction. The executor or administrator will need to contact the appropriate solicitor or conveyancer to establish what should happen.

What happens to a leasehold property when the owner dies?

The leasehold interest normally forms part of the deceased person’s estate. As such it may ultimately be transferred to a beneficiary or sold as part of the estate administration. It will depend upon what the Will says and the circumstances of the estate.

Does probate affect property inheritance?

Where the deceased was the sole registered owner, then the personal representative will normally need to obtain the appropriate grant to transfer or sell the property. It will depend upon what the circumstances are.

What happens if a beneficiary dies before receiving an inheritance?

This will depend upon when the beneficiary died, what the Will said, and whether they were entitled to the inheritance. The appropriate succession rules will determine what happens to the entitlement.

Can an inherited leasehold property be extended?

An inherited leasehold property can potentially be extended. As with all lease extensions, the appropriate process will depend upon the circumstances. Professional advice can help to establish the position.

Does an inherited property need a valuation?

Not necessarily, but it might be if the property needs to be sold, divided between beneficiaries, extended, or valued for some other specific purpose.

Conclusion

When someone dies before a property transaction is completed, the transaction doesn’t just stop. The deceased person’s estate needs to be administered, and the executor or administrator will need to deal with the property and any outstanding arrangements.

In relation to an inherited leasehold property, there are additional considerations such as the remaining lease term, ground rent, service charges and other restrictions in the lease.

The entire process can be summarised as:

Death → Estate administration → Probate where required → Inheritance → Property transfer or sale → Leasehold considerations → Valuation where needed → Possible lease extension

Not every inherited property requires a valuation or lease extension. However, the right approach will depend on the property and the intentions of the new owner.

The administration of an estate, inheritance and property matters should be dealt with by an appropriate legal professional. Where the issues relate to the value of a leasehold property or potential lease extension, then an independent valuation professional can provide the required property advice.