A less than thrilling topic but one that came across my desk this week once again
A less than thrilling topic but one that came across my desk this week once again – is what happens to property when an owner passes away. Who is responsible, who inherits and how long does it take? For an even more complicated take, what happens when the property is already on the market, or under contract?
Starting off, the way property is treated at death depends first on whether it is in multiple names (and another owner survives) and if so, whether the property is held as Tenants in Common or Joint Tenants. Tenants in Common allows a specific share of the property to be allocated to each owner, i.e. 50:50, and that share can be traded, sold or left to an Estate in the case of the death of that owner. Under a Joint Tenancy however, the property is owned by all joint tenants as a whole, and in the case of one passing away, their share automatically goes to the remaining owners, rather than becoming part of an Estate.
A Joint Tenancy is the most common type of shared ownership in QLD, and very typical with spouses buying property together or in cases where there is family ownership and a specific intention regarding an Estate. Tenants in Common might be more likely where siblings, friends or business partners purchase together and want to clearly indicate everyone’s contribution.
So, joint tenancy and one owner passes, the death needs to be registered, the person is removed from title and it goes to the surviving owners. Fairly straightforward.
In the case of a sole owner passing, or tenancy in common, then the property forms part of the Estate, and must be dealt with by the Executor of the will (which everyone should have!). depending on the provision of the Will, the property might be transferred to a specific person, or might be sold and the net proceeds shared. The Executor will typically be empowered to take reasonable actions towards the sale such as cleaning, maintenance, appointing an agent and ultimately signing instructions and transfers for the disposal of the property. This is definitely an area to engage an Estate lawyer though to make sure you have the right advice.
Where a property is under contract at the time of passing, a buyer can enforce the contract, with the Estate bound under the original terms. In practice though all parties might agree to dissolve the contract rather than push at a sensitive time.
Whether considering this issue for yourself, or just planning ahead – as always make sure you get the right advice from the right experts (in this case, a Wills and Estates Lawyer).