Recent Property Purchase Issues

[brisbane 04]

Hi all,
Just seeking advice/comments. I purchased a property in Oct 2012 with a 30 day settlement. I provided a $12000 deposit with an agreement I could access the property 10 days before settlement to commence rehab. This is where it gets a bit screwed up. After receiving access to the property to rehab it I was notified by my solicitor that the gentleman who I was buying it from passed away in a nursing home sending the deal into probate. So I continued rehabbing the place as contracts had been signed and it was only a delay. In January I was informed by my solicitor that it was taking a little longer than usual as the executor of the will lived in Ireland and that it should be all sorted out in the next 2 weeks. Continued rehabbing spent close to $20000 bringing it up to a rentable condition. Notified yesterday that a disgruntled family member was now contesting the will and it could be delayed for a further 6 months. I have now ceased rehabbing and am unsure what to do now. Any advice out there regarding this situation?
Thanks

 

[mumbai]

Sorry, for not being any help here.
But, why would someone in the right mind do a 20K worth of reno for a place not yet settled!!!

 

[Terry_w]

These things happen...

Did you have a special condition relating to death or bankruptcy by either party?

Probate needs to be granted before anything can happen because the person you had a contract with is not around to complete it. Probate is the courts appointing someone as the legal personal rep of the deceased. Even then they have to do all sorts of things before the estate can be distributed. If there is a dispute then a caveat can be lodged on the will to prevent the probate being granted. This could drag of for 2 years or more.

Have a careful read of your contract. See if you are able to pull out if settlement is not done within xx days. See also your special conditions relating to work done during before settlement. Your efforts may just enrich the estate.

If you have suffered a loss your solicitors may be liable if they didn't advise you properly.

 

[brisbane 04]

Hi Terry,
No special conditions that I was aware of regarding death or bankruptcy. I thought I was dealing with the owner with regards to the contract but he was the financial executor due to the owner being in a nursing home. Its not costing me any money other than the renovations I have done. I continued with the renovations believing from my solicitor that we were just going through the motions of settling the probate and it was near completing of same. The solicitor is currently seeking advice from their partners as to what happens next.

 

[Terry_w]

Hi Terry,
No special conditions that I was aware of regarding death or bankruptcy. I thought I was dealing with the owner with regards to the contract but he was the financial executor due to the owner being in a nursing home. Its not costing me any money other than the renovations I have done. I continued with the renovations believing from my solicitor that we were just going through the motions of settling the probate and it was near completing of same. The solicitor is currently seeking advice from their partners as to what happens next.

Solicitor sounds negilgent in at least 2 aspects.

1. Not properly advising up front of the risks of the vendor dying, especially if he was acting through an attornney or financial controller.

2. Not property advising you once he knew about the death.

and probably
3. not properly advising of the risks of renovating before settlement.

 

[Andrew_A]

It does save time and interest costs but it's no small risk to work on a property before settlement, best to get some quality legal advice about your options, hope it all works out well for you and often it does.

 

[brisbane 04]

Thanks Andrew and Terry. I'm hoping they let the sale go through and place the monies in a trust account to be distributed once they have sorted out who gets what.

 

[Terry_w]

Thanks Andrew and Terry. I'm hoping they let the sale go through and place the monies in a trust account to be distributed once they have sorted out who gets what.

They can't. At the moment no one has any legal authority to complete the transaction. Even if there is a will with an executor named the executor is not appointed and not able to do anything until the court authorises him or her. The will has to be 'proved' - it may not even be the valid will. It could be a forgery or there could be a later will.

 

[alexlee]

Terry, just to clarify, the Executor has no right to act for the estate until Probate is granted?

Where the will is contested, for example, what happens in terms of paying bills etc related to the assets of the estate?

 

[Terry_w]

Terry, just to clarify, the Executor has no right to act for the estate until Probate is granted?

Where the will is contested, for example, what happens in terms of paying bills etc related to the assets of the estate?

Thats right - the executor is not actuall executor until appointment by the court. Until this happens the estate is in a limbo (a bardo for Tibetan speakers!). Bank accounts will be frozen at death and cannot be used or accessed. (if it is a small account some banks may just allow access on production of the will).

Bills must just sit and wait. Banks will let interest accumulate on loan. I have one now where it is more than a year since death but no probate. We have managed to get the agent of the property to start depositing the rent from the property directly into a new account which has been opened in the name of the executor as executor for the estate of xxx - but this is before appointment. The bank then deducts payment for the loan interest from this account. (rent more than repayments). I think a will was just used to open the account. But this executor has to take care as they will be liable personally if anything goes wrong.

Powers of attorney etc cease to operate on death too. So if you have someone who is sick and likely to die in the near future it may be an idea to open a joint account with some money in there to pay bills while waiting for probate. The survivor can then access this account.

Also there are problems with one director one shareholder companies. No new director could be appointed until probate is granted - there is a special section in the corporations act which says the executor can appoint a new director. But the company will also be in a limbo if it cannot pay wages or bills. This could force it into administration. So plan ahead...

 

[Raddles]

Hi there
is your solicitor making inquiries about who the disputing parties are - often if there is a dispute about probate, wills, beneficiaries etc and the proportions they get - the matter can often be resolved at mediation rather than the court process
it may be your solicitor could be lobbying the disputing parties to resolve the issues to allow the sale of the property to be completed
even if court action has commenced - the parties can agree who will administer the estate - to at least allow contracts to be observed
thanks

 

[brisbane 04]

Hi Raddles thanks for your response still haven't settled the solicitor feels the daughters claim on the estate is unjustified so hopefully in the near future we can go forward with the settlement.

 

[JayC]

Brisbane, just to clarify what TerryW said, there are two types of "challenge" to a will.

The first is a challenge to the validity of the will itself (such as that the testator was coerced, of unsound mind etc). This type of challenge will usually delay the grant of probate and thus the executor's ability to complete the sale.

The second is a claim by someone (usually a child or spouse) that they should receive more money than the will says they do. This type of claim (called a family provision claim in NSW) does not affect the granting of probate except in unusual circumstances and the executor should be able to obtain a grant in the usual course. Once the grant is obtained, the executor can complete the sale. They have to be careful about what they do with the proceeds, but that's not your concern.

You should have your solicitor find out what sort of challenge is being brought against the will. If it's the latter type, your solicitor should be enforcing whatever clause is in the contract that the executor will obtain probate.

If the sale doesn't proceed, your rehab costs are a different issue, and ultimately it comes down to two things:

1. What advice you were given in relation to the risk of incurring costs on the property before settlement (this is always a risk, even if the vendor doesn't die); and

2. What the contract says about the consequences of the vendor to obtain probate - particularly what it says about any work you have done.

 

[Bobbie]

I would seek the advice of a solicitor who specializes in probate and/or property matters.

You could consider placing a caveat on the property to protect your interests - if you can prove you fullfill certain requirements. Be aware though that there can be penalties for applying a caveat which is later found to be unreasonable.

Keep all receipts and documents relating to any agreements, work, and materials. Take before and after photographs of any repairs etc. You may be able to claim them from the estate if the sale fails to take place.

You could also enquire about any claim you might have if you have caused the property to be valued more highly due to your improvements.

I have no legal training, but these seem like reasonable options to investigate.

 

[brisbane 04]

Hi All,
Thanks for your responses. At present we are still in limbo. My solicitor has written to their solicitor seeking the possibility that the settlement go through and the monies go into a trust. We are awaiting a response. The daughter feels her father was of unsound mind when he made his will but according to the solicitor who drew up the will he was certified fit by Drs when making the will. If I receive no response from the letter I will look into getting a solicitor who specializes in probate/property law.
Thanks Martin

 

[Terry_w]

Hi All,
Thanks for your responses. At present we are still in limbo. My solicitor has written to their solicitor seeking the possibility that the settlement go through and the monies go into a trust. We are awaiting a response. The daughter feels her father was of unsound mind when he made his will but according to the solicitor who drew up the will he was certified fit by Drs when making the will. If I receive no response from the letter I will look into getting a solicitor who specializes in probate/property law.
Thanks Martin

Who is 'their'? The house is basically vested in the state now. that is the state govt owns it unless either probate is granted or administration is granted. Nobody would have authority to make this decision.

What would happen, for example, if they allowed this to happen and then a later will was found which left the house to the RSPA? And who would be signing the transfer documents?

 

[Terry_w]

If the property is in VIC, then

s13 Administration and Probate Act 1958 (VIC)
Real estate to vest in executors and administrators - upon the grant of probate or administration
http://www.austlii.edu.au/au/legis/vic/consol_act/aapa1958259/s13.html