When buying or selling property, whether it be immovable (fixed property) or movable property (e.g. furniture/paintings/vehicles), the parties negotiate and deal with each other in person.
An agreement is concluded between willing and able buyers and sellers, and a sale agreement is entered into between the parties. All parties are alive and able to physically sign the Agreement of Sale for the property in question.
Just like dealing with the representative of a company (which is not a natural person), when dealing with the assets of a deceased person, you also must work with the duly appointed representative of the deceased’s estate. The deceased person is replaced by his/her estate.
In this article, I’ll deal with the following questions regarding purchasing immovable property from a deceased estate, but in most cases the same rings true for movable properties.
- Who owns the property if the Seller has passed away?
- What is the process in obtaining a Letter of Authority/Executorship and why is it necessary?
- What is the process that follows when purchasing a property from a deceased estate?
- How long does it take for the ownership of immovable property to pass to the purchaser after buying the asset from a deceased estate?
- What to be aware of when buying immovable property from a deceased estate?
- Who owns the property if the Seller has passed away?
The moment the owner of the property dies, all properties (be it movable-, immovable and/or cash in the bank and investments) owned by the deceased in his/her personal capacity, fall within his/her deceased estate.
The properties are owned by the deceased’s estate, which is regulated by the Administration of Estates Act 66/1965 (as amended) and controlled by the Master of the High Court in each province of the Republic of South Africa.
The person nominated by the deceased, to act on his/her behalf after death, is called the Executor/Executrix/Estate representative, depending on the situation. Said person only acts in a representative capacity on behalf of the deceased’s estate to enter into Agreements of Sale.
Should the estate of the deceased have a total asset value of less than R250 000.00, then the nominated representative of the deceased’s estate is called the Estate Representative and a Letter of Authority is issued by the Master of the High Court to grant the relevant authority to said person to act on behalf of the deceased’s estate.
Should the Estate of the deceased have a total asset value of more than R250 000.00 then the nominated representative of the deceased’s estate is called the Executor/Executrix and a Letter of Executorship is issued by the Master of the High Court to grant said person the relevant authority to act on behalf of the deceased’s estate.
If the nominated person is male, he is called the Executor and if the nominated person is female, she is called the Executrix.
For purpose of this article and for ease of reference, let’s assume in example that the deceased and the nominated person is male and the estate has an asset value of more than R250 000.00
NOTE: An Executor is appointed by the Master of the High Court only to manage the assets of the estate to the benefit of the heirs. The Executor is not the owner of the deceased’s property.
NOTE: The heirs to the deceased’s estate are also not the owners of the assets of the deceased’s estate. The heirs are only entitled to their respective inheritance from the deceased’s estate once the liquidation and distribution account is approved by the Master of the High Court and the assets are ready and available to be distributed to them.
- What is the process in obtaining a Letter of Executorship and why is it needed?
The Letter of Executorship is the document issued by the Master of the High Court to the representative of the estate, after the death of the owner of the said assets and properties.
This Letter of Executorship provides authority to the person legally appointed to act on behalf of the deceased’s estate, to manage and wind up the assets and affairs of the deceased after his/her death.
The owner of the property is no longer alive to sign any paperwork, agreements and/or documents and as such requires a representative. The Letter of Executorship is the required document granting the authority to the person who has been appointed to act on behalf of the deceased’s estate.
Without the Letter of Executorship, the Executor does not have the power/authority to enter into any agreements of sale, on behalf of the deceased’s estate.
For this reason, it is important to have a valid Last Will and Testament. During his lifetime the deceased appoints an Executor in his will. If the owner of the property dies without leaving a will or a valid will, then the known heirs to the deceased’s estate must decide amongst themselves who to appoint as the Executor
Do you see the problem already here? The heirs must agree on who to appoint as the representative of the estate and if they cannot, then the Master of the High Court has to intervene, and this causes delays in an already lengthy process.
The person appointed in the will to act as the legal representative of the deceased’s estate, applies to the Master of the High Court for the issue of the Letter of Executorship to him. The forms to be completed and submitted to the Master’s offices are on the website of the Master of the High Court. Once completed, the originally completed and signed forms, together with the supporting documentation, must be submitted to the office of the Master of the High Court by hand.
Each province has at least 1 office of the Master of the High Court and the Master in the area where the owner of the property normally resided during the last 12 months of his lifetime, has the necessary jurisdiction to accept the reporting documents and issue the Letter of Executorship.
The Master also supervises the duties and actions of the Executor of the deceased’s estate. The Master is the only official government department able to issue these Letters of Executorship.
The Master of the High Court takes about 2-3 weeks to issue the Letter of Executorship, depending on various factors and if all the documents that the Master requires was in fact submitted to their offices.
The point I am getting at is that there are a lot of admin and documents that need to be signed, completed, submitted and attended to when someone passes away. Instruct an attorney who has a predominantly estate practise, to assist in this process. An estate practitioner is entitled to charge 3.5% of the estate asset value as a fee for the work done to wind up the estate.
Unlike the CIPC (the Companies and Intellectual Property Commission) The Master of the High Court does not have an electronic system whereby members of the public can log in to find information. Everything is still processed via telephone, physical attendance at the Master’s offices and hand delivery of documents to be provided. This is labour intensive work and to be handled by a qualified and experienced Attorney dealing with the Master’s offices on a regular basis.
- What is the process that follows purchasing a property from a deceased estate?
The Executor must carry out the wishes of the deceased, as per the terms of his last valid Will and Testament.
Sometimes this is not financially or practically possible. If the deceased does not indicate that his properties must be sold after date of death, then the heirs to the property can decide to instruct the Executor to sell the properties directly out of the estate and distribute the proceeds of the sale between them.
- The Master of the High Court issues the Letter of Executorship; this document indicates who is the duly appointed representative of the deceased estate and only then will the relevant person have the authority to enter into an Agreement of Sale with a purchaser for the property in question.
The Executor must take instructions from the heirs to the property regarding the sale, because the Master will require their go-ahead to proceed in any event.
- The Executor applies to the Master of the High Court for approval of the saleand transfer of the immovable property from the deceased estate to a 3rd
This process is done by submitting another application to the Master of the High Court, together with the relevant supporting documents. The Master does not take less than 14 working days to either, approve the sale transaction, reject the transaction or request further documents or information in their process to consider the application.
- How long does it take for the ownership of the property to pass to the purchaser when buying immovable property from a deceased estate?
Taking into account that;
- The estate of the deceased is first to be reported, then
- The Letter of Executorship is to be issued and whereafter
- The Master of the High Court is to approve the sale and transfer, for the transferring attorneys to proceed with the normal registration process,
I would add no less than 1-2 months to the transfer procedure before it is completed, should the estate already be reported and the Letters of Executorship already be issued. If not…the normal transfer procedure time extends with no less than 2-3 months, should all the relevant documents be available to the Master of the High Court to make its decision on if he/she will approve the sale and transfer of the property to a 3rd party.
- What to be aware of when buying immovable property from a deceased estate?
- If you are told that the owner of the property has passed away, make sure the person you are dealing with and signing the paperwork, is the duly appointed representative of the deceased estate. Just ask for a copy of the Letter of Authority/Executorship to confirm the identity of the person in question and if they have the necessary authority to act on behalf of the deceased’s estate.
- Make sure the Letter of Authority/Executorship is already issued by the Master’s offices, before signing any Agreement of Sale. If you enter into an Agreement of Sale with an Executor that has not yet been duly appointed by the Master, then the Agreement is null and void.
- The heirs to the deceased’s estate are not the owners of the property and as such entering into an Agreement of Sale with an heir can lead to that agreement being null and void, if the heir is not also the duly appointed Executor of the estate.
- Make sure the Agreement of Sale that you are entering into includes a suspensive condition, that the Master of the High Court is to first approve the sale and transfer by a certain date, otherwise the transaction can drag on for months at an end without knowing if the transaction can and will be finalised.
- In general, when dealing with a deceased estate, it will take a lot longer than normal for the property transfer transaction to be finalised. As such, make sure you can afford to wait for registration of transfer.
Disclaimer: Although I am an attorney by profession, I am not YOUR attorney. This article is for informational and educational purposes only, does not constitute legal advice and does not establish any kind of attorney-client relationship with me. I am not liable or responsible for any damages resulting from or related to your use of this information.