Can an executor buy property from the estate UK?

If you are the executor or administrator of the estate of someone who has died, you may want to purchase their home yourself. There can be problems with this and it is important to understand the rules before you act. In the worst case scenario, the court could set aside your purchase many years from now if an objection was raised.

We take a look at whether an executor can buy a property from an estate and how to approach the situation to avoid difficulties arising in the future.

At Lockings Solicitors we have extensive experience in dealing with estate administration, including complex cases and those where an executor wishes to buy a property from the estate. We can represent you in dealing with the winding up of the deceased’s affairs and advise you on the best course of action in dealing with their home.

We offer a free initial chat to enable you to ask us about the probate and conveyancing processes as well as any other questions you may have.

You can ring us on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly.

The rule against self-dealing

After a death, the executor or administrator of the estate has the task of finalising the deceased’s affairs. This often includes selling the deceased’s home as well as liquidising other assets so that the estate can be distributed to the beneficiaries in accordance with the terms of the Will. If the deceased did not leave a Will, then the estate is inherited by family members in accordance with the Rules of Intestacy.

As an executor or administrator, you have a duty to act in the best interests of the beneficiaries at all times. This includes achieving the best price for assets that are sold.

If you wish to purchase the deceased’s home yourself, this is a clear conflict of interest. While you are bound to sell for the best price, it would be in your own best interests to pay a lower price. For this reason, there is a rule, known as the rule against self-dealing, that prevents an executor, administrator or trustee from simply purchasing assets from an estate or a trust.

What happens if an executor or administrator breaks the self-dealing rule?

If an executor or administrator purchases an asset from the estate they are administering, such as a property or shares, the beneficiaries can raise an objection. There is no time limit and the beneficiaries do not have to establish any loss. They can make a claim even if they consented to the sale at the time and you paid the full market value for the asset.

In a 1997 case, Tito v Waddell (No.2), the judge said that the rules against self-dealing meant that a sale was voidable by any beneficiary ‘however fair the transaction’.

This means that the purchase of property from an estate must be approached with extreme caution and should only be carried out after taking expert legal advice.

Can I buy property from an estate I am administering?

Despite the rule against self-dealing, there are certain circumstances under which it may be possible for an executor to purchase property from an estate that they are administering. These are:

1. The Will states that the executor can purchase the property if they wish;
2. All of the beneficiaries have given informed consent – it must be noted that this is more than simple written consent
3. The court has approved the purchase

One further option exists, and this is for the individual named as the executor to renounce or step aside and not act as an executor. For this to be effective, they cannot have taken any steps at all, even minor ones, to deal with the estate administration.

The Will permits the executor to purchase the property

The testator, or the person who made the Will, could have worded it in such a way that the rule against self-dealing is clearly excluded. Your solicitor will be able to advise you whether this is the case. Even if the Will is set out in this way, it is still crucial to take certain precautionary steps in dealing with the purchase, to include obtaining a professional valuation of the property.

The beneficiaries give informed consent

If the beneficiaries are aged 18 or over and have mental capacity, they may be able to give informed consent to the sale.

Informed consent needs a high level of understanding on the part of the beneficiary, both of the implications of the sale to an executor and the facts and the law in respect of the transaction.

This means that simply putting their consent in writing is not sufficient. They need to have a full understanding of the situation and the intention to consent to the self-dealing. They will need to take independent legal advice and the right form of consent drawn up. They will also need to be provided with all relevant information in respect of the estate and the value of the property.

The court approves the purchase

Where informed consent cannot be given, for example, because some of the beneficiaries are minors, are not yet born or cannot be traced, then it may be possible to ask the court to sanction a sale to an executor or administrator. This will not necessarily be granted and it will depend on the individual circumstances of the case.

It is an option for the court to give an executor permission to bid on the property at an auction that is open to the public and where the property has been openly advertised in advance.

Renouncing probate

It may be possible to renounce the role of executor. If you intend to do this, it can only be done early on before you have taken any steps at all in dealing with the estate administration. Even very minor actions can be classed as ‘intermeddling’, for example, dealing with correspondence or arranging for payment of the funeral expenses.

If you are considering renouncing, you should speak to a solicitor to ensure the correct process is followed. You should also take advice before offering to purchase the property from the estate.

Dealing with the sale or transfer of property following a death

Dealing with property after someone’s death can be complex. As an executor or administrator, you will need to obtain a Grant of Probate or a Grant of Letters of Administration giving you authority to sell or transfer the property.

You will also need to take steps to obtain the best price for the property to fulfil your duty to the estate’s beneficiaries. You will need to be able to prove that you have secured the best price, so you may need to obtain professional valuations and show that you advertised the property on the open market.

Our probate property experts can advise you on the best way to proceed and ensure that all necessary work is carried out to protect your position and reduce the risk of a claim being made against you.

Contact our East Yorkshire and York probate solicitors

The probate process can be complex and is generally time-consuming and many find it particularly stressful at what is usually a very difficult time for them and their family. If you would like us to deal with an estate administration on your behalf, we would be pleased to help.

To take up our offer of a FREE initial chat, call us on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly. As well as helping local clients in Beverley, Hull and York, we also act for clients from across East Yorkshire and the York area.