Managing Real Estate in Estate Administration: From Valuation to Sale

In many estates, real estate—whether a family home, rental property, or commercial premises—often represents the most valuable asset. When someone passes away, the executor (or administrator if no will exists) must carefully manage this property during probate and eventually distribute it according to the will or Queensland intestacy rules. However, handling real estate in probate can involve a range of tasks, from organising valuations and maintenance to deciding whether to sell or transfer the property directly to beneficiaries.

This article outlines property management in estates, highlighting legal requirements specific to Queensland, the practical steps for estate representatives, and recommended best practices.

When an individual passes away owning real estate, key steps in estate administration typically include:

1. Identifying and securing the property (ensuring it remains insured and well-maintained).
2. Confirming legal title (checking Land Titles Registry records).
3. Valuing the property (for both probate and potential capital gains tax calculations).
4. Determining whether to transfer or sell the property according to the will’s instructions or beneficiary agreement.
5. Managing sale proceeds or ownership transfer among beneficiaries.

Yet, each step involves further nuances—including compliance with Queensland-specific laws (e.g., the Succession Act 1981 (Qld) and the Land Title Act 1994 (Qld)) and local procedures (like Titles Registry requirements for transmitting property from the deceased to the estate). By understanding the entire process, executors can meet their fiduciary duties and avoid costly errors or delays.

Securing and Maintaining Real Estate

Immediate Actions

• Locate Keys and Documents
  Executors should identify any keys, alarm codes, or caretaker contracts related to the property. They also need to gather title deeds or confirm them via an online Titles Registry search.
• Insurance Coverage
  If the deceased’s insurance policy could lapse, executors must inform the insurer promptly and confirm ongoing coverage. If the property is vacant, the insurer should be notified; some policies adjust coverage for empty homes.

Why It Matters
Leaving real estate unattended can result in vandalism, storm damage, or liability if someone is injured on the premises. Proper insurance coverage is essential to protect estate assets.

Ongoing Maintenance

Executors are personally responsible for preserving the property’s value until distribution. Tasks might include:

1. Basic Repairs
   • Fixing leaks, broken windows, or structural issues to prevent further deterioration.
2. Garden or Outdoor Care
   • Overgrown lawns can attract council fines or reduce curb appeal if a sale is imminent.
3. Utilities and Rates
   • Settling electricity, water, council rates, and body corporate fees (if it’s a unit) from the estate account.

Valuation and Appraisal of Property

When Is a Valuation Needed?

A formal property valuation can be critical in multiple scenarios:

• For Probate
  Queensland probate procedures often require an estimated value of all estate assets, including real property, though an informal estimate may suffice if no disputes arise.
• Capital Gains Tax (CGT) Purposes
  If the property is sold after the deceased’s death, the date-of-death market value might influence CGT calculations, particularly if it was not the deceased’s principal residence.
• Beneficiary Distribution
  If multiple beneficiaries are entitled to shares of the property, a professional valuation ensures a fair basis for buyouts or equalising divisions.

Types of Valuation

Tip: If beneficiaries expect conflicts or the property is unusual (e.g., farmland or commercial premises), a full professional valuation from a registered valuer is safest.

Deciding Whether to Sell or Transfer the Property

Will Instructions

If the will explicitly states who inherits the property, the executor’s role may simply be to transfer the title into the named beneficiary’s name. However, if the will instructs the property to be sold and proceeds divided, the executor must handle the sale accordingly.

In Queensland, property can be transmitted from the deceased to the executor (under Transmission Application), then to beneficiaries or buyers (via Transfer documents) recorded with the Titles Registry.

Beneficiary Agreements

Even if the will is silent or vague about real estate, beneficiaries may:

• Agree to Sell
  Splitting net proceeds in line with their entitlements.
• Opt for One Beneficiary to Buy Out Others
  A beneficiary might purchase the others’ shares, requiring a formal transaction.
• Retain Property Jointly
  Possibly for future rental income or family use. This arrangement should be documented carefully (a co-ownership agreement).

Caution
Before finalising decisions, ensure the estate can cover any debts (like mortgages). Selling might be necessary if liabilities or tax obligations outstrip available cash.

The Sale Process

Executor’s Authority to Sell

In Queensland, executors gain the right to sell estate property upon receiving a grant of probate (if a valid will exists) or letters of administration (if intestate). The property is effectively held in trust for beneficiaries until distribution. If the will includes a specific “power of sale,” it clarifies the executor’s authority to sell.

Preparing the Property

1. Repairs and Presentation
   Executors decide whether modest renovations or aesthetic improvements (like painting) will boost sale price enough to justify costs.
2. Real Estate Agent Selection
   A local agent familiar with the region can advise on marketing strategies, listing prices, and open house schedules.

Sale Contract and Settlement

• Conveyancing
  Once an offer is accepted, a solicitor or conveyancer prepares the contract. Executors sign on behalf of the estate.
• Titles Registry Transfer
  After settlement, the buyer lodges the transfer documents. The sale proceeds go to the estate account.
• Stamp Duty
  Generally paid by the buyer in Queensland, so it does not affect estate funds directly.

Note: If the property was the deceased’s principal place of residence, the estate might avoid CGT on a subsequent sale if sold within a certain timeframe. Confirm with an accountant regarding any extended CGT exemption conditions.

Dividing Real Estate Among Beneficiaries

Transfer in Specie

When transferring property in specie (i.e., directly giving the property rather than selling it for cash):

1. Beneficiary Acceptance
   The recipient must agree, especially if they are inheriting a share.
2. Stamp Duty Exemptions
   Certain Queensland rules offer stamp duty relief if the transfer is purely to beneficiaries under a will. The Titles Registry might request a stamped “Transmission by Death” or “Transmissions Application.”

Partial Ownership or Buyouts

Where multiple beneficiaries have partial entitlements:

• Co-Ownership: They hold the property as tenants in common or joint tenants, requiring ongoing collaboration (e.g., paying rates).
• One Buys Out Others: The property’s market value minus associated costs is used to calculate each beneficiary’s share. A formal transfer plus a settlement of funds ensures fair distribution.

CGT Implications

If the deceased owned the home as a main residence, beneficiaries might not face immediate capital gains tax if they sell within two years of death (common ATO rule). However:

• If it was an investment property, a valuation at date of death is essential. Future sale might trigger CGT based on any increase from that date’s market value.

Real-World Example: Estate with a Residential Home

Scenario:
A mother passes away in Queensland, leaving her primary residence to her two adult children equally. She also has modest cash savings.

Steps:

1. Probate: The executor obtains a grant of probate, verifying the will.
2. Valuation: A local agent provides an estimate, and a licensed valuer confirms the $600,000 market value.
3. Decision: Both children wish to sell the house and split net proceeds.
4. Maintenance: Executor ensures yard is tidy, minor repairs are done, and the property is staged for sale.
5. Sale: The home sells for $620,000. After expenses, $610,000 remains.
6. Distribution: Each child receives $305,000. Because the mother occupied the home as her principal place of residence, no CGT arises for the estate.

Lessons: A formal valuation safeguarded the estate from underpricing, and the principal place of residence status avoided capital gains complexities.

Potential Pitfalls and How to Avoid Them

Frequently Asked Questions

1. Can we sell the deceased’s property before probate is granted?
   Generally, you can market or list it but cannot finalize a sale or sign the transfer until the executor’s legal authority (probate) is confirmed.
2. Is stamp duty payable if I inherit a property from a will?
   In Queensland, direct transfers to beneficiaries under a valid will typically enjoy stamp duty exemptions. Confirm details with the Titles Registry or a conveyancer.
3. What if one beneficiary wants the house, and the other wants cash?
   That beneficiary may “buy out” the other’s share at an agreed or appraised market value, ensuring fairness.
4. Do we need a professional valuation if we plan just to transfer the property among siblings?
   It can still be wise—particularly if balancing shares or if the property might be sold later for CGT reasons.
5. What if the property is co-owned by the deceased and a surviving spouse?
   If registered as joint tenants, full ownership might automatically pass to the spouse, outside the will or probate. If tenants in common, the deceased’s share falls into the estate.

Conclusion & Key Takeaways

Managing real estate in estate administration often represents the largest and most involved aspect of probate. Executors must balance legal formalities—like obtaining probate, transferring title, or adhering to Queensland duty rules—with the practicalities of repairs, valuations, and potential sales.

Key Takeaways

1. Secure & Maintain: Insure and upkeep the property from the outset to preserve value.
2. Obtain Accurate Valuations: Whether for probate, CGT, or beneficiary buyouts, a professional approach avoids disputes and underpricing.
3. Respect the Will: If the will dictates sale or direct inheritance, follow it unless beneficiaries unanimously agree otherwise.
4. Engage Professionals: Seek help from registered valuers, conveyancers, or estate lawyers in Queensland to handle unique local requirements.
5. Plan for Taxes & Fees: Understand potential CGT, mortgage payoffs, or stamp duty exemptions to prevent last-minute surprises.

By carefully navigating each step—from initial security and valuation through to final sale or transfer—executors uphold their fiduciary responsibilities and ensure beneficiaries receive their rightful entitlements.

1. Succession Act 1981 (Qld) – Outlines probate and administration laws in Queensland.
2. Land Title Act 1994 (Qld) – Governs title registration, transmissions, and transfers of property.
3. Queensland Titles Registry – Provides official guidelines on lodging transmissions and transfers due to death.
4. Queensland Law Society – Offers best practices on conveyancing and estate administration.