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Tuesday, October 15, 2019

Selling a house from an estate before probate is granted

The post below originally appeared on this blog in 2010. It has been updated and revised.

Because it can take weeks to receive a Grant of Probate from the courts, and because executors are usually under pressure from beneficiaries to wrap up the estate quickly, executors may be in a hurry to sell a house or other real estate in the deceased's estate. This is particularly true if the market is in the seller's favour at the time. Executors don't always want to wait until they've received the paperwork from the court.

Unfortunately, the executor does have to wait until the court issues a an order of Probate. It's not just a technicality or insignificant piece of paper. Think about what it actually does. It allows someone else to sell another person's house and look after the money. If a Probate order wasn't needed, then what would stop pretty much anyone from trying to sell that house and keep the money? The probate order is proof that the person selling the house, who after all is not the owner of it, has the legal right to sell it and accept the money.

An executor who goes ahead without the probate and tries to sell a property will find that the Land Titles Office or registry will not allow this to happen. They must have a court certified copy of the probate before they will register a new owner.

The house can be listed for sale while the probate documents are being processed at the court. The executor who is selling the house needs to make sure that he or she is clear on the sales agreement that the sale is subject to a probate order being granted.

Beneficiaries who are pressuring for the sale of the house need to realize that once the executor has filed the documents and is waiting for the probate order to be issued, there is little the executor can do to speed up the process.

14 comments:

  1. Lynne,

    Interesting post. It triggered something that I could use.
    At a property hearing (unresolved) the opposing lawyer offered me a sum of money for my half of the property. As I have previously posted, my Estate matter has been going on for 15 years due to a disgruntled beneficiary and deceiving lawers. There is a problem. Probate is not completed as a (only one) beneficiary is illegally withholding Estate monies that have to be Probated. In 2004 the first lawyer (since retired) knew that but did nothing about it. Currently 2019-both lawyers (mine and the opposing) know that but hoped I would accept what was offered. My lawyer said nothing. TBC

    Webeye

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  2. To clarify my post of Oct 15/10
    I am the Executor. Grant of Probate was issued based on the documentation I had and gave my lawyer in 2004. It is based on the monies in the Estate Bank Account. The problem -1) the beneficiary has withheld Estate monies with the claim that a parent gave it. No documentation. The lawyer writes it was 'a directive'. 2) the beneficiary withholds other bank monies that belong to the Estate. The beneficiary and lawyer admit to that. My directive, my instruction to my lawyer is to subpoena the beneficiary. He does not.

    What was initially very simple, is now complicated due to a disgruntled beneficiary and lawyers.TBC Webeye

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  3. Webeye, if what you say is correct, make a complaint to the Provincial Bar against the lawyers, and start a Court Action for recovery of the missing money. Fifteen (15) years is a bit long to hold an Estate in limbo

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  4. Wendy
    Thanks for your suggestion. Yes, I am aware of the CBarA,and the PBarA and several other sources that I plan to contact at one point. I think my case is one for the books. I am waiting for a response from 2 individuals from X firm . I plan to contact the Public Trustee (L Butler made me aware) as I think this might be the way to go first. I want out. I am exhausted. I have health issues. TBC
    Webeye

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  5. @ Webeye

    Assuming you know the accurate value of funds held by the beneficiary, and assuming that beneficiary's share is to be greater than that amount, I anticipate it would be a simple matter to consider those held funds as a partial pre-distribution of the amount that beneficiary is to receive. As a simplified example, if that beneficiary's total share is to be $80K but is withholding $35K, then her remaining distribution will be $45K.

    If the beneficiary is not agreeable and will not sign-off, then the matter may then more easily proceed to a court passing of accounts for final resolution.

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  6. @Mark
    Thanks for your suggestion. This simple case has gotten complicated over 15 years. Still to be resolved is uncompleted Probate, and CRA. I have conducted myself accordingly and everything has to be above board. I don't have lawyer skills, so I have to be mindful of mistakes that could cost me and the Estate. As to Pass Accounts. That was done years ago, with the info I had. It is not possible to do a proper Pass Accounts unless the Executor has all the financial facts. A lawyer agreed with me on that but did nothing. A Passing of Accounts was done but there was inaccuracy and deception. Some corrections are required. I am dealing with sneaky lawyers.
    If an Executor agrees to a deal that is not right as to Probate, CRA or other, then the opposing lawyer could further protect his client and contact Probate Court and CRA. The Executor could then be on the hook for thousands of dollars. Perhaps Lynne Butler can comment on that. TBC.
    Webeye

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  7. @ Webeye

    Estate fees (Probate) may be revised higher or lower once the full value of the estate is known. The estate fees previously paid were based on the initial anticipated value at that time, but as Executor, you have since recognized the estate value is considerably different than initially thought.

    With regard to CRA, those additional funds held by the beneficiary were not available to the estate to allow the estate to invest and receive income. As the funds will likely have been invested and produced income exclusively for the benefit of the beneficiary that retained them, that beneficiary should have been paying all taxes on those earnings over the past 15 years.

    Suggest reviewing the entire matter with an accountant well experienced in estate matters. He/she may suggest a course of action which will address the outstanding matters in compliance with the will's provisions, to allow the estate to advance to a proper conclusion.

    Any lawyer and accountant you retain to work for the estate, is to be directed by and answer to you as Executor. Since you are ultimately responsible, as professionals in their respective fields, they should be able to provide you with valid recommendations on methods to address virtually any issue that may arise.

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  8. @Mark, thanks for your helpful comments.
    Re Probate. Games are being played and I can't get answers. There is a property and the value has increased.

    CRA- Yes. Interest was earned (document) but everything is being done to show there was none. Again more games. Key Documents are being withheld from me. CRA can't help. As long as they get paid all is okay.

    Accountant? I am not sure I can use one at this time as I don't have all the necessary information that would be required. Once again, games, from both sides.

    "as professionals (Me-lawyers?) in their respective fields, they should be able to provide you with valid recommendations on methods to address virtually any issue that may arise" .[Mark] In a perfect world yes. Not all professionals can attach integrity, ethics etc. next to their names.

    I am waiting for responses to letters that I sent to my Lawyer. My directives, my instructions are very clear and to the point. They are valid.
    I understand that some of you may find this Estate story hard to believe. The problem? Not having all the pertinent information. TBC
    Webeye

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  9. How much is a lawyer allowed to charge a client.

    How much can an executor charge the estate in nanitoba.

    Does an executor have to produce financials, like something that would match the written cheque he wrote.
    Can a executor have a new lawyer after a release form is sent to the beneficiary from a deceased lawyer.

    if the beneficiary takes on a new lawyer are you still required to pay the deceased's lawyrtd firm

    ReplyDelete
    Replies
    1. Hi Richard,

      Generally speaking, a lawyer can charge whatever he or she wants, as long as clients agree to pay it. If the lawyer's fee goes too high, he/she will be priced out of the market.

      Like most provinces, Manitoba does not give specific numbers for the amount an executor can charge. It says only that an executor can take "fair and reasonable" compensation. This has been interpreted by Canadian courts to mean that executors can be reimbursed for reasonable estate expenses, and can take a wage of up to 5% of the value of the estate. Unless the estate is complex, the executor would not charge the full 5%.

      Yes, an executor must produce an accounting. I think that is what you mean by "financials". This only has to be given to residuary beneficiaries of the estate. Nobody else can legally demand to see it. An executor normally provides summaries - so this would not mean a copy of every single cheque or receipt. This is partly to keep costs lower so that the executor doesn't spend hundreds of dollars on making photocopies for everyone. If the beneficiary is okay with the summaries, then fine. If the beneficiary specifically asks for copies of the individual items, then the executor should produce them.

      An executor, like any client, can change lawyers whenever he wants to.

      I'm not really sure what you're asking me in the last question. I don't know what you mean by the deceased's lawyer or why that person would be involved. Also, most beneficiaries don't have lawyers unless there is a dispute on the go. Anyone who drops one lawyer and hires a second one must of course pay the bill at the old one.

      Lynne

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  10. LB-Generally speaking, a lawyer can charge whatever he or she wants, as long as clients agree to pay it.
    Me- Does the 'new' lawyer have to, provide a retainer letter (yours is excellent and transparent), when he chose to become the default lawyer because the previous (same firm) curiously left? Actually, we all know why? The new one is a 'partner'.

    LB-Yes, an executor must produce an accounting.
    Me-How can an executor produce a proper accounting if a beneficiary is withholding Estate monies? How then, can a lawyer prepare a 'proper' Pass Accounts if all financials are not available to the Executor?

    LB-Anyone who drops one lawyer and hires a second one must of course pay the bill at the old one.
    Me-If an Executor makes contact with the Public Trustee and still has a lawyer due to 'unfinished' business, what happens then?

    Webeye

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  11. Hi, Lynne

    If an executor hires a lawyer but the laywer passes away before I have a chance to approve the accounting and sign the release form.
    Do I still have to pay that lawyers firm.

    The son sof the deceased lawyer from he same firm emailed me and he said he was going to take on the file.

    I sent him the questions I had to ask of the executor, and requested to see some receipts,and vehicle saftsa documents so I before I could approve the accounting.

    The lawyer passed this file onto another lawyer, with the explanation that he did not have the experience to work on the file, and it was agreed with the executor to hire a new lawyer.

    So now I the executor has a new lawyer, and I was sent a new release form to sign with three lawyer fees.

    I sent the same set of questions to the third lawyer to ask the executor and now she has raised her fee, by one thousand, and said if I don't sign the release form that the executor has agreed to procede with the queen bench

    The executor is asking 3,900.00 + 500.00 gas.
    On a 30,000.00 estate, plus now there are three lawyers to pay 1700.00, 1600.00 + 1000.00.

    The executor sent me a invoice not signed by the company, and no sales tax, also he has not provided a reciept for a 1100.00 dollar repair bill and his excuse is he gave it to the buyer of the vehicle.

    There are other missing documents, so at this point I am thinking something is wrong.

    ReplyDelete
    Replies
    1. Hi Richard,
      If your agreement with the various lawyers is to pay by the hour, then you have to pay for the hours they worked. It's pretty unusual and I'm sure very frustrating to have so many lawyers involved.

      It sounds to me as if the $1,000 added by that last lawyer is the fee she would charge if she has to handle the passing of accounts in court. So if it doesn't go to court, she wouldn't have to be paid for that.

      I see what you're saying about perhaps something is wrong. For one thing, the executor is charging a fee of more than 10% of the estate, which is double the usual limit. Perhaps it would be worth it for this to go to passing of accounts. If you can't get the answers you need, you shouldn't be signing a Release. The downside is that the legal fees for passing of accounts usually come out of the estate, so beneficiaries will get less, but if there is money unaccounted for, you get less anyway.

      Lynne

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  12. Hi Lynne

    Yes I agree, this estate has been on hold for five years.

    It is not my fault that the this time has evolved.

    The executor did not file the income tax on time and he had to wait for six months after filing the next year for the clearance certificate.

    Then his lawyer sat on the file for 3 months .and sent me the release forms.

    I was busy with work and it was a couple of months after that I looked over the accounting and put my questions in an email to the lawyer.

    Then after a few months went by I sent the lawyer an email, but his son replied informing me that his father passed away, and that he was taking on the file.

    Then I sent him an email afew months after, and he informed me that he was not experienced to handle this file, and after talking to his client, they thought it was best to hand the file over to a lawyer experienced in this field.

    Three more months went by .and I was sent a release form from the third lawyer.

    Pay executor $3,900.00 + $500.00 in gas but no record of travel expenses, and no reciepts, pay the deceased lawyer $1595.00, pay his son the send laywer $1000.00for what I didn't understand what he did except for refer the client to another lawyer, and finally pay the third lawyer $600.00.

    There were some figures written in the release, also if I signed the release it states after payment , my share was about $50.00, ok I questioned this, and she admitted there was an error, and corrected the error, and she sent me a receipt from a concrete company, I was supposed to believe that this was the vehicle safety reciept, note it was not signed by the dealer, and no tax on the invoice, and of course my flags went up, the other big repair bill in the amount of $1100.00, I was informed the executor gave it to the buyer of the truck, and he did not have a copy.
    I replied back because the executor cannot provide me with the receipts, and I am not able to approve the accounting that I am willing to pay the first lawyer, but not the second lawyer, as I don't see that he added anything to this, and I will pay the third lawyer the six hundred for the accounting, and the executor the same amount as the first lawyer, plus's gas but he must provide the receipts.
    The lawyer sent me an email back informing me that this is what her client offered executor $3000.00, first lawyer $1695.00, dencd lawyer $500.00, and third lawyer has now raised her free from $600.00 to $1695.00.

    There was a message that if I did not except this that her client has given the go ahead to proceed with the Queen's bench to approve the accounting.

    Hi, Lynne

    Ok my question is how long does it take, and is it the duty for the court to approve the accounting in a fair way, or are they going to put the executor interest first, and except the accounts with missing reciepts, and pay all of the lawyers that the executor has involved.

    The executor was a friend of my father's, he is not related to me, and he asked me if he could be the executor of the estate.

    This is a small inheritance of $30,000.00.

    ReplyDelete

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