Toronto Estate Sales Part Two – Buying and Selling During Probate

Selling an Estate During Probate

When buyers see a Toronto home which is for sale by an estate their first thought is they have to sell so they will take lower market price. Wrong!  Yes, the home has to be sold but the executor has the fiduciary duty to get the best price for the home for those receiving a benefit from the estate.  An executor does not wants to end up in court explaining why they sold a home for significantly less than market value.

By the time you see a house listed, the executor has most likely started the legal process known in Ontario as Probate.   You can check out a previous blog of mine on applying for probate.

The question I am asked by executors and those buying an estate listed home, is why not wait until you get probate before you list?  I would put the reasoning down to 2 answers:

  1. If the estate is waiting 8 to 10 weeks to get probate that is an awfully long time to have a home vacant. So add this time with the time it takes to sell the house and then close…you looking at approximately 5 months of being empty.   Lots of things can happen in 5 months with weather, maintenance or break and enter issues  – insurance companies get especially nervous when no one is living in a home.
  2. In an active real estate market, like the spring market, the estate may get more money listing when there are more buyers looking for a home.   By waiting the house could be trying to sell during the winter or the dog days of summer.

So you find the perfect house and it is an estate sale, but the question you are asking yourself is there anything you have to do differently?  Yes, but let me explain as most buyers  get a little fuzzy on this one.   Negotiations regarding price, chattels, additional clauses, inspection, etc. are all straight forward; however the estate (if they are in process of getting probate) will most likely ask for a long close…90 days.  Why, you might ask? The easy answer is, since the court has not granted probate the title of the house is in the deceased homeowner’s name therefore title can not be transferred to the buyers.   But once the court as granted probate the estate is then in the legal position to transfer title; therefore close.

Most estate lawyers will also request from me as a realtor to submit a probate clause in any offers to purchase.  This just a safety, just to cover off  a situation where a closing date is quickly approaching and probate has not yet been approved the court.  It allows the executor to delay closing for up say 90 days, but once probate is received the estate agrees to close as quickly as possible…say within 2 weeks.

So once you have an agreement of purchase and sale and all the other conditions having been meet you would then have a firm deal.  The probate clause is only for ensuring title is clear for transfer.

I do a lot of estate sales and this something I explain to a lot o buyers who are new to the process, so I hope it helps.    If you have any questions you can always contact me.