Executors: Change the Locks to be Safe Not Sorry

Real estate creates a different set of responsibilities for estate executors. If you are the legal representative of an estate, consider the real estate issues in this post.

It’s important to get the right legal advice to protect yourself. You never know who may have a key to dad’s apartment or townhouse. If things go missing, can you guess who gets the blame?

As executor, you must maintain fire and liability insurance on real estate at all times. You are responsible for inspecting the property regularly to protect yourself from lawsuits. Weather conditions and insurance requirements will dictate the frequency. In some cases, you may be better off hiring someone to perform these duties.

What if the house is vacant?

A pipe in the house can burst during the winter. Water may flood the property and the adjacent neighbour’s home. The neighbour could then sue you for not having proper vacant insurance coverage in place. Other problems may not look so obvious.

Sale of real estate by an estate trustee or executor

What if the will says you must sell a house? Will you be able to sell the house if it’s not empty? Will you need to remove any tenants or 15 years of stacked magazines from the basement?

Get legal advice. This is crucial before you list any estate property for sale.

You will want a lawyer to check the title to the property. Make sure you know who shows up as the registered owner. You may be surprised that your uncle’s house is still registered in his late wife’s name.

This is a simple glitch.

But what if the property records show another person as a co-owner? You will need their consent to list and sell.

Look for any property survey, deeds and title documents. I often see cases where an old mortgage is still registered against a property. Sure, it may have been paid off more than 21 years ago, but you still must remove it from the property. This can take some time.

Executors: can you answer these real estate questions?

As an executor, you must answer a number of questions including:

•    What must be done to prepare the house for sale?
•    Can you spend money for improvements to the property?
•    Are repairs different from improvements?
•    Do you have to remove any building infractions or liens?
•    Can you sell the property as is?
•    How much should you pay a real estate agent?
•    Must you have the property appraised before you list it for sale?
•    Do you always have to accept the highest bidder’s price?
•    How important is a fast closing date if the house is empty?

Executors’ duty to sell

Let’s say you, as executor, are to sell the family home. You must divide the proceeds equally between Johnny and his sister, Alanis.  The problem is Johnny lives in the house. Alanis wants the house sold as quickly as possible. She’s afraid the real estate market and prices will collapse.

Falling prices are not the only danger with property. Real estate is a wasting asset. It costs money to keep it. Hydro, water, heat, insurance and taxes use up the estate’s money each month. Houses deteriorate and need repairs and replacement parts.

What are the executor’s options?

Johnny, who lived in the home with dad before dad died, is not in a hurry. He is waiting for a car accident settlement in the new year. He will then buy out his sister’s half-interest in the property.

Alanis claims to have heard this settlement story every year for the last three years. She says Johnny hasn’t worked in five years. He can’t even afford to pay the property taxes or rent to the estate.

You may end up going to court to collect the rent or to evict Johnny. Johnny and Alanis may each hire lawyers to fight over the house.
Even in the best of families, executors are called upon to keep the peace.

Ed Olkovich BA, LLB, TEP, and C.S. is an Ontario lawyer, nationally recognized author and estate expert. Ed is a Toronto-based Certified Specialist in Estates and Trusts. He is a Master of Executor Kung Fu – the practice of executor self-defence. Ed is also the editor of Carswell’s “Compensation & Duties of Estate Trustees, Guardians and Attorneys”. © 2013