Real Estate, Real Problem

Barry Fish

Those of us who have experienced the loss of loved one when he or she owned a property in his or her name at the time of death can relate to the above title. In a word, death will freeze the property until something can be done about unfreezing it. To be clear, where the deceased owns the property until something can be done about unfreezing it. To be clear, where the deceased own a property jointly with his or her survivor, the survivor will apply to have his or her name registered on title and this procedure can be accomplished very quickly through a lawyer, once death certificate is in hand. However, it is sole ownership by the decesed which presents the complex and time-consuming issues.

With once exception, briefly described as “First Dealing After Conversion”, the path to unfreezing the property lies in obtaining probate from the applicable court. The explanation of the First Dealing exception is technical and explained at the end of this article.

Suppose you are Executor for your mother, who just passed away owning her home in her own name. What steps do you take to sell it?

1. The property should be appraised for its value as at the date of death, and the appraisal should be in the form of a written appraisal provided by an accredited professional. The reason for such appraisal lies in allocating a value of the property for insertion in the probate application that you, as executor, will have to file with the court.

2. As there will be a gap in time until the closing of a sale, proper communication must be made with the property insurer so that you, as executor comply with the insurer’s requirements. This will defend against lapse of the insurance coverage due to non-occupancy of the home.

3. Once you arrange with the Realtor for the cleaning, staging and listing of the home, the next step will be to await an offer from a purchaser. An offer from an outside agent picking up on the MLS listing may reflect the closing date wishes of his prospective purchaser, but those wishes may not be realistic.

4. It is at this point, or earlier, that my office usually becomes involved in the real estate process. An agent will often ask me what the timing will be until probate is granted. If the agent’s call comes early enough, I can provide a reasonable estimate of the timing, which in turn allows the agent to work with the offer so that a realistic closing date is inserted. Further, I may be asked to provide the agent with wording which gives the seller the right to extend the closing date for thirty or sixty days to allow for probate.

5. You might ask what happens if the extension period passes and probate still has not been granted?

The answer on the surface is that time is of the essence of the agreement of purchase and sale and if the executor cannot make title as of the designated closing date, the purchaser has the right to declare the agreement at an end and is entitled to the return of his or her deposit.

However, beneath the surface, the real question lies with the intentions of the purchaser. Will he or she be willing to extend again, or put the transaction at an end? Sometimes, arrangements are made where the purchaser, through his or her lawyer, pays funds into the trust account of the seller’s lawyer to secure the transaction and the seller releases the key to the purchaser so that the purchaser can move in, and when probate is finally granted, the purchaser takes title, registers his or her mortgage and the balance of the purchase price is paid to the seller.

The seller extends his or her home insurance coverage and the lawyers negotiate the variables in these arrangements. How much money is necessary to secure the transaction. Is there rent being charged? What exit language will be specified in the event this arrangement falls apart for some reason?

THE EXCEPTION
To express this exception as simply as possible: There are two systems of title registrations in Ontario: the older system entitled Registry and the newer system entitled Land Titles. With a view to accommodating the current electronic registration system (Teranet) the Province of Ontario swept hundreds of acres of titles at a time, from the older Registry system into the newer Land Titles system. This process occurred over a number of years. The swept in properties were registered as land titles qualified properties. The date that a registry property was swept into land titles qualified was called the Conversion date.

If Dad left a Will appointing his executor; bought a property in the registry system; died when the property was still in the registry system; then at a later date the property was swept in as land titles qualified property and nothing was done to affect the registration of the property after the date of Conversion, then probate would not be required to unfreeze the property, as it could be dealt with under the heading of First Dealing After Conversion.

Barry M. Fish has been dealing with probate, estate and real estate issues since the founding of the firm in June, 1973. The law firm is located at 7951 Yonge Street, Thornhill, Yonge Street (south of Highway 7), and our phone number is (905) 881 -1500 Email; bfish@fishlaw.ca