When a property is inherited, it can be a complex and emotionally charged process for all involved. One key question that often arises is whether all heirs must agree to sell the property.
In this comprehensive article, we’ll explore the answer to this question, considering the perspectives of all parties and the legal and financial implications.
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Do All Heirs Have to Agree to Sell Property?
In the UK, inheritance law is governed by the Administration of Estates Act 1925. This act outlines the rules and procedures for distributing a deceased person’s assets, including real estate. The act states that if a person dies without a will (intestate), their property will be distributed according to a set of rules known as the rules of intestacy.
If the deceased person left a will, the will usually names one or more executors who are responsible for administering the estate and distributing the assets to the named beneficiaries. The executors have a legal duty to act in the best interests of the beneficiaries and to follow the instructions outlined in the will.
Selling Property with Multiple Heirs
When a property is inherited by multiple heirs, the decision to sell can be complicated. Sometimes, all heirs may agree that selling the property is the best course of action. However, in other cases, one or more heirs may object to the sale.
If the deceased person left a will, the executors have the legal authority to sell the property without the consent of all beneficiaries, as long as they are acting in the best interests of the estate and following the instructions in the will. However, if the deceased person died intestate, the decision to sell the property may require the agreement of all heirs.
Factors to Consider When Selling an Inherited Property
When deciding whether to sell an inherited property, there are several factors to consider:
- Financial Implications: Selling the property may have financial implications, such as capital gains tax, inheritance tax, and stamp duty tax. It’s important to understand these implications and factor them into the decision-making process.
- Emotional Attachment: Heirs may be emotionally attached to the property, especially if it was the family home or held sentimental value. This can make the decision to sell more difficult.
- Future Use: Heirs may have different ideas about how the property should be used in the future. Some may want to keep it as an investment property, while others may want to sell it and use the proceeds for other purposes.
- Maintenance and Upkeep: Owning a property requires ongoing maintenance and upkeep. Heirs must consider whether they are willing and able to take on this responsibility.
Resolving Disputes Between Heirs
If there is a dispute between heirs about whether to sell the property, there are several options for resolving the conflict:
- Mediation: Heirs can try to resolve the dispute through mediation, in which a neutral third party helps them find a mutually acceptable solution.
- Court Intervention: If mediation is unsuccessful, heirs may need to seek court intervention. The court can order the sale of the property if it is in the best interests of the estate and the beneficiaries.
- Partition Action: Heirs can also file a partition action, which is a legal proceeding that allows the court to divide the property between the heirs or order its sale.
Can an executor sell property without all beneficiaries approving?
If the deceased person left a will, the executors have the legal authority to sell the property without the consent of all beneficiaries, as long as they are acting in the best interests of the estate and following the instructions in the will.
Can siblings force the sale of an inherited property?
If there is a dispute between siblings about whether to sell an inherited property, they may need to seek court intervention. The court can order the sale of the property if it is in the best interests of the estate and the beneficiaries.
What are the tax implications of selling an inherited property?
These are three tax considerations when selling an inherited property.
Inheritance Tax
Inheritance tax is due within six months of the person’s death and should be settled by the estate’s executors. It is possible to pay inheritance tax on property in annual instalments to avoid a situation where the property has to be sold to settle the tax bill.
The basic rule with inheritance tax is that if the total estate (including property) is worth more than £325,000, then 40% of everything over that amount must be paid to the taxman.
Capital Gains Tax
You will only pay capital gains tax on an inherited property if you decide to sell it. If the property has increased in value from the date you inherited it, then capital gains tax may be due on the rise in value (the profit).
The rates are 18% for basic-rate taxpayers and 28% for higher or additional-rate taxpayers, although this will reduce to 24% from April 2024. Everyone gets an annual capital gains tax allowance, which is £6,000 per person for the tax year 2023/2024, reducing to £3,000 in 2024/2025.
Stamp Duty Tax
You do not pay stamp duty on inherited properties. Stamp duty is only chargeable when buying a property. However, if you inherit a property and then purchase another property without selling the inherited one, you might end up paying higher stamp duty rates on the new purchase.
How do I transfer ownership of an inherited property?
To transfer ownership of an inherited property, you will need to go through the probate process. This involves applying for a grant of probate if the deceased person left a will, or a grant of letters of administration if they died intestate.
Once you have obtained the grant, you can transfer ownership of the property to the named beneficiaries or sell it.
Can an Executor Be Forced to Sell Property?
If an executor is not fulfilling their duties or is acting in a way that is not in the best interests of the estate, they can potentially be forced to sell the property. This may involve seeking court intervention or filing a complaint with the relevant regulatory body.
Executors have a legal responsibility to administer the estate according to the terms of the will and the law. They must act impartially and in the best interests of the beneficiaries[3]. If an executor is acting dishonestly, engaging in improper conduct, or neglecting their duties, beneficiaries may have grounds to take action against them.
Examples of misconduct that could lead to an executor being removed include:
– Stealing from the estate
– Failing to keep proper accounting records
– Wasting or mismanaging the estate
– Refusing to obey a court order
To remove an executor, beneficiaries must first write to the executor and request an explanation of their actions. If the explanation is unsatisfactory or no explanation is provided, the beneficiaries can apply to the court to remove or substitute the executor.
The court has the power to appoint a substitute executor if the original executor is found to be unsuitable due to incapacity or misconduct. The application must be supported by evidence of the executor’s unsuitability and details of the deceased’s assets and liabilities.
In some cases, the court may order the sale of the property if it is in the best interests of the estate and the beneficiaries. However, the decision to sell the property ultimately rests with the executor, unless the court intervenes due to misconduct or incapacity.
It’s important to note that being an executor is a significant responsibility, and they can be held financially liable for any mistakes they make. If you find yourself in this situation, it’s advisable to seek professional legal advice to ensure you are fulfilling your duties correctly.
Different Methods of Selling Property: Pros and Cons
When it comes to selling property, there are several methods available, each with its own set of advantages and disadvantages. Understanding these can help you make an informed decision that best suits your needs and circumstances.
Below is a comprehensive table outlining the pros and cons of the most common methods: Estate Agent, Property Auction, and Property Saviour.
| Method | Pros | Cons |
|---|---|---|
| Estate Agent | – Wide market reach through advertising and listings | – Longer to sell, typically several months |
| – Professional guidance and support throughout the process | – Estate agent fees can be high | |
| – Potential for higher sale price with effective marketing | – Potential for sale to fall through due to buyer financing issues | |
| – Flexibility in negotiating terms and conditions | – Time-consuming process with multiple viewings and negotiations | |
| – Access to a broad range of buyers, including those needing mortgages | – Reliance on third parties, risk of chain collapse | |
| Property Auction | – Quick and reliable sale, often within a month | – High auction fees and marketing costs |
| – Competitive bidding can drive up the price | – No guarantee of sale if the reserve price is not met | |
| – Transparent sale process | – Sale prices can fluctuate, potentially lower than expected | |
| – Chain-free, reducing delays | – Limited buyer pool, often cash buyers only | |
| – Seller stays in control with reserve price | – Requires quick move-out if property is sold | |
| Property Saviour | – Fast sale, typically within 10 days | – Will receive a lower offer compared to the open market |
| – No estate agent fees or surveys | ||
| – Guaranteed sale with no risk of fall-through | ||
| – Cash buyers, providing certainty and speed | ||
| – Assistance with legal fees and probate |
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
