This article is targeted towards registered real estate agents in Trinidad and Tobago, though readers may find it to be of wider application and usefulness.
Let us prelude this article with two factual scenarios:
Scenario A – Jane and JaniceImagine that you’re an agent who has met a client desirous of selling a parcel of land – we’d call this client Jane Doe. Upon inspection of the title Deed, you notice that the property is vested In Janice Doe – Jane’s mother, who died some years prior. Before you could explain to Jane that she may not be able to sell, she shows you a written Will left by Janice in which the property is willed to Jane. Jane has kept the Will in her possession, but has never taken any steps to get the title Deed on her own name.
In Scenario A, a grant of Probate is required. Probate is required when someone has died testate, that is, leaving a valid Will.
Scenario B – John and JoyYou are acting for a purchaser who is desirous of purchasing a parcel of land, and you have found the perfect parcel for him. The parcel is supposedly owned by John Smith, who furnishes you with a copy of his title Deed. Upon inspecting the title Deed, you notice that the land is actually vested in Joy Smith. Joy is John’s deceased wife, who passed away just three months prior without leaving a Will. They were legally married, but have no children together. John, who is still grieving, has not yet taken any steps in Joy’s estate.
In Scenario B, a grant of Letters of Administration is required. Letters of Administration is required when someone has died intestate, that is, without leaving a valid Will.
IMPORTANT: In neither of the above scenarios can a sale proceed immediately. In each scenario, an estate application is required before one can attempt to sell the respective property.
The word “probate” is used in a general sense to refer to any situation that requires an estate application – regardless of the type of application. Moreover, there are other types of estate applications aside from the two mentioned above; however, our focus will be on these two given that they are the most common ones.
An outstanding estate application is an encumbrance on the property, thereby preventing title from moving freely from a vendor to a purchaser.
Even if someone’s name is stated on a Will as being the beneficiary of a certain property; or, even if someone is entitled by law to be the beneficiary – they do not have legal title until the relevant estate application is applied for and granted. In the interim, their interest is equitable at most.
Why is the process of Probate or Letters of Administration even required?
Jane: “My mother always said she wanted me to have the land when she passed away; I have been taking care of the land even when mommy was alive, and there is no dispute about who owns it.”
John: “This was my wife’s land, it is common sense that I would own it if she died. Not so?”
While the assertions above may have some degree of merit, an estate application is still required in each instance. Here are some reasons why:
- A system is needed to dictate what happens to someone’s assets when they die. Without this, there would be chaos: land-grabbing; theft; and, a range of other behaviours unbecoming of a civilised society.
- To ensure that the assets are treated with in the manner the testator would have wanted (in the case of testacy), or in accordance with the law (in the case of intestacy); and, are not unduly meddled with or misappropriated.
- To allow time for claims to be made by persons who believe that they ought to have been catered for in the estate of the Deceased, or those who have some other legal or equitable claim against the estate.
- To make the commission of estate fraud more difficult.
- Where there is a Will, applying for Probate serves to prove the validity of the Will, that is, whether it complies with legal requirements; whether there is fraud; whether there was undue influence on the testator etc.
- Applying for Letters of Administration serves to prove that there is in fact no existing Will, and that the law should step in to dictate what happens to the assets.
- To ensure that someone’s creditors are able to take recourse against their estate to possibly recover what is owed to them by the Deceased.
- To ensure that responsibility is placed on someone to conduct the affairs of the Deceased until the estate is fully settled.
While there are certain exceptions, the passage of ownership of a person’s assets upon their death is not automatic – an estate application may be seen as the bridge between the estate, and the entitled beneficiaries.
What does an estate application involve, and how long does it take?
In short, an estate application is a written application made to the Probate Registry through one’s Attorney(s)-at-Law, which, once successful, would lead to a grant being made (grant of Probate, grant of Letters of Administration etc.)
Once the grant is issued, it can be used by the Legal Personal Representative or Administrator of the estate to administer the estate and deal with the assets in the estate – in a lawful manner, of course.
The process of applying for and obtaining a grant typically involves taking certain documents to one’s Attorney (Death Certificates, Birth and Marriage Certificates as applicable etc.), which the Attorney will annex to the application, and lodge the application in the Probate Registry of the High Court. One’s Attorney would be able to advise on the required documents and specific steps depending on the application being made.
The application would be reviewed, and it is possible that queries will be made by the Probate Registry. Once these queries are addressed, and all other matters are proper, the application would be granted to the applicant.
In terms of how long it would take before an application is granted, the Probate Registry has been known to be unpredictable in its waiting periods. Estimating a waiting period is difficult because Attorneys find that some applications are granted in surprisingly short order, while others may take unduly long. In any event, it is unusual for any application to be granted in less than a year – so this is a general minimum waiting period.
What does an outstanding estate application mean for Real Estate Agents?
As an Agent, you want to be the one to sell Jane’s property, or secure John’s property for your purchaser. Each one is being sold at a bargain price, and you can’t afford to lose out. However, both Jane and John reveal that they have no money to spend on an estate application. This issue frequently arises, where one is entitled to a valuable asset like property, but simply does not have the funds to cover the cost of the estate application.
However, even if Jane and John have the money to do the relevant estate application, you’re worried that by the time it is complete, another agent / vendor / purchaser would have approached them and ‘stolen’ your listing. What now?
Generally speaking, there is nothing precluding two parties from entering into an agreement where the subject property is yet to be probated. However, the parties should definitely seek legal advice before doing so. Consider the following:
- Completion or closing of the sale is subject to, and provided that all goes well with the estate application. If it doesn’t, the intended purchaser is entitled to get his deposit back. For the Agent, this can mean no payment of commission.
- It would be difficult to ascertain a completion date, since there is no guarantee as to when the estate application would actually be granted. Such agreements would need to specify that completion shall occur only upon the estate application being granted.
- Such agreements ought to be registered, as a form of notice to the general public.
- Where multiple people are entitled to the same property, they must all be on board with the transaction.
- Issues like fraud need to be considered. What if a deposit is made, then during the course of the application fraud is discovered, thereby materially changing the Vendor’s entitlement? Paying the deposit into escrow is important, to protect the Purchaser.
- Where the Vendor does not have the funds to pay for the estate application, he may want the deposit in his hands to cover the cost of it. This also poses significant risk for the reasons aforesaid; and, whether one takes that risk would depend on the particular facts of the situation together with the purchaser’s willingness to do so.
- Payment of the Agent’s commission would more than likely be delayed until the actual conveyance or closing takes place, so a thorough listing agreement should also be in place. The arrangement of the parties should be thoroughly explained to the Attorney preparing the agreement, so all particulars can be explicitly addressed and not left to chance or interpretation.
- It is possible for the Agent to be paid from the deposit, but this would mean that if the sale isn’t successful, the Purchaser would have lost money by way of paying the commission early on.
- Agreements like these should always be prepared by an Attorney-at-Law.
Article Credit: SeepersadLaw
Photo Credit: iStock; realtor.com
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