Is it possible for executors to enter into a contract to sell a property before obtaining a grant of probate?

In the midst of probate registry backlogs and an increase in the need to sell property quickly, executors are asking if they should consider exchanging contracts on property which forms part of the deceased estate, prior to probate being granted.

The first consideration is whether the application for the grant of probate has been expedited (known as a grant ad colligenda bona) but there is no guarantee that the grant will arrive prior to exchange of contracts, considering the existing delays in issuing grants.

On the basis that the deceased made a valid will which effectively appointed executors, the will permits those executors to act in the administration of the estate and the deceased’s assets will be deemed to vest in the executors at the date of the deceased's death.

Theoretically, this could allow the executors to exchange contracts of a sale of property without a grant, however, a grant will be needed to provide title as required under the contract’s standard conditions but also by Land Registry upon the buyer’s subsequent application for registration. It is therefore commonplace for conveyancers to want to have sight of the grant of probate prior to exchanging contracts.

Depending on the needs of the parties involved, it could be that the need to exchange contracts without having sight of probate outweighs the risks and it could be suggested that parties ought to consider exchanging contracts conditionally, requiring parties to complete the matter “X” days after the grant of probate has been issued and received.

For some, a conditional contract may be unworkable because although an exchange of contract is desired, if the likely completion date exceeds a few months, it may not align with the parties’ initial intentions and then the need to exchange in absence of the grant may fall away.

If the buyer is in a “chain”, with their own sale to factor in, a conditional contract is unlikely to work as the completion date will not be ascertainable until the grant has been issued. A buyer may want to be free of an exchange of contracts so that their deposit is not tied up, allowing them to withdraw from the sale prior to exchange and to pursue another property.

In relation to estate administration, there are some other aspects to consider, but not limited to the following:

1. Under the executor’s appointment, has their scope been limited, preventing the above?

2. Are the legal fees likely to increase given the additional work in advising and drafting a conditional contract? If the executors are out of pocket, and probate is not granted, there may not be an entitlement for their costs to be reimbursed from the estate.

3. There is a risk that the executors could be at risk, personally, if there is any form of loss to the estate.

4. If the buyer is leading the negotiations to exchange contracts without the grant of probate having been issued, would the buyer consider indemnifying the executor?

5. Are the best interests of the estate being adhered to and considered in the decision process? Especially if the buyer is requesting an exchange in absence of the grant?

This blog was written by Pardeep Kandola, an Associate Solicitor within our Conveyancing team in Leamington Spa. To speak to Pardeep about Conveyancing matters, please call 01926 887700 or email pardeep.kandola@thomasflavell.co.uk