How to Deal With Property of the Deceased in BC

When a loved one dies and leaves behind property, the family members cannot divide, let alone sell the property as they see fit. British Columbia has estate laws that dictate how a deceased person’s assets must be handled.

These laws first address how the property is passed on to the remaining family before they receive the go-ahead to sell. For instance, unless the property is left to a family member by title through joint ownership or a trust, the property must go through the probate process to determine the new owner.

Further, even if the beneficiaries are clearly outlined in the will and want to sell the property, they cannot sell it immediately. Indeed, selling a property after death in BC is not as straightforward as you may have thought. We will explore the details of how to sell the property after the death of a family member in BC, including how ownership is determined, the documents needed, how to transfer the property, and how to value the property before it's sold.

When a loved one with property dies in BC, the executor takes over the role of managing the real estate according to the deceased person’s wishes. The will often contains a breakdown of how they wanted the property divided.

However, the executor must first complete a process of determining ownership, which is often determined by how the deceased owner holds the title. There are four ways of owning property in BC:

• Individual ownership: The person has full ownership of the property. In this situation, the will directs who becomes the new property owner after their demise. The property may go through probate to make the named beneficiary the new owner.
• Joint tenancy: The deceased individual had joint ownership with one or more people, meaning they had an equal share. After their demise, their share automatically goes to the joint tenants. Transfer of ownership in this arrangement is often straightforward and, in some circumstances, allows the recipients to avoid probate.
• Tenancy in common: Occurs when a person holds ownership of part of a title in equal or different percentages. Upon death, their portion becomes part of their personal estate, and ownership belongs to the named beneficiaries or as stipulated in the will. The probate process may be necessary to determine the rightful owner.
• Spousal ownership: The person has joint property ownership with their spouse. Property ownership automatically goes to the spouse after death, and probate is not required.

How Ownership Affects the Selling Process

The selling process for joint tenancy and spousal ownership is relatively easy because the arrangement bypasses the probate process. However, to avoid complications, consider changing the title to the surviving tenant or spouse named as the sole owner. Transferring the title simplifies the tax and utility management.

If the property title lists the deceased as the sole owner or tenant in common, the selling process may be prolonged, and it might take months before the beneficiary receives the green light to sell. In most cases, the executor must apply for probate. The court process takes time because various factors must be looked at, such as:

• Who are the beneficiaries?
• Is anyone else interested in the property?
• Has proper asset inventory been done?
• What debts did the deceased have?
• Is there a plan on how distribution will be done?

Once the judge scrutinizes these aspects and renders a decision, they grant probate. The executor submits the probate order to the BC Land and Titles Office to transfer the title from the deceased name to theirs. Afterward, they can put the property on the market for sale.

The documents you need to obtain before selling a property depend on whether the property will pass through the probate process or not. If you are going through probate, the following documents will be required by the courts before they issue a grant of probate:

• The original death certificate
• A valid will
• A statement of the deceased assets and liabilities
• A copy of the deceased titles for any property owned
• Documents from banks and other financial institutions
• Certificates of valuations for the assets
• Documents showing the assets and debts the deceased had
• Application Form P3 and P8 (for more than one executor)

These documents help the judge to assess the deceased person's financial situation. It also assists in validating the will and preventing disputes from arising later. The valuation certificates give the overall worth of what the deceased person left behind and serve as a guide in calculating the inheritance tax. The property titles confirm ownership and ease the process of transferring and selling the property once the title is in the name of the rightful beneficiary.

Transferring property in British Columbia can occur in one of three ways when a family member passes away.

Estate Sale as an Executor Representative

The deceased person will have given the executor the power to manage the estate, including selling the property after they die. The extent to which they can go is often outlined in the will. Before the executor sells, they must be registered as the property owner by acquiring a grant of probate from a BC court and using it to change the title.

After the executor becomes the registered owner, they now have the right to sell the property. The executor is responsible for ensuring the property is sold in accordance with the deceased's wishes and any legal requirements. To prevent misunderstandings, the executor must discuss issues such as whether the beneficiaries want the sale proceeds to remain in the trust or distributed immediately after selling.

Transfer to Surviving Spouse Jointly Owned

A property is jointly owned if the title specifies using the words ‘joint tenants.’ If these words are absent, the BC law considers ownership as tenancy in common. When one spouse passes away and the property is jointly owned, the remaining spouse automatically becomes the sole owner. However, ownership must be transferred with the BC Land Title and Survey Authority (LTSA).

The process entails submitting the original death certificate and LTSA Filing Form 17 to the land title office in your county and paying the processing fee. The LTSA may take days to weeks to process your application and remove the deceased person’s name from the title. If the property is a house that still has a mortgage, you may need the help of an estate professional to determine the next steps.

Gift Transfer as Outlined in the Will to a Beneficiary

A gift transfer of property occurs when the deceased person names a specific beneficiary as the one to receive and own the property. Several steps must be taken before you can own such an asset. The executor must first obtain a grant of probate and apply to become the property’s owner. Afterward, the executor will transfer the property to your name.

The Wills, Estates, and Succession Act (WESA) restricts how soon the executor can transfer the real estate to you. Ideally, the executor must wait for at least 210 days after receiving the grant of probate. However, if the other beneficiaries agree to have you receive the property before the 210 days are over, the executor can start the transfer process. The entire process can take up to a year if you have to wait for the mandatory period to end.

Public and private home appraisers in BC use three main approaches in determining the market value estimate of a property: direct comparison, cost, and income approach. These approaches analyze and give the highest market value of a property and the most beneficial use that will bring a high return on investment. The assessment considers the legal, social, and economic factors. Let's discuss the three factors briefly:

• Direct comparison approach: The value is set by the amount an informed buyer is willing to pay after comparing your property with other similar properties. The variables considered are property size, location, economic factors, and physical features.
• Cost approach: The valuation assumes that an informed buyer will value your property based on the market price for relatively similar properties and compare the outcome with the cost of buying land and constructing the building.
• Income approach: The property’s value is obtained by calculating the probable income you will get if you rent it out and subtracting the likely expenses. This income stream estimation gives the market value.

When valuing your property and calculating the selling price, consider other factors that can affect your offering price. For instance, if your deceased family member had outstanding debts, you may have to pay them off using the sale proceeds. Hence, you must include any outstanding loans or mortgage balance in your selling price.

Additionally, if the property you want to sell is a primary residence, you will likely be exempt from capital gain taxes. However, if the property is not your primary residence, you must calculate the capital gain, which will be taxed.

To ensure you get the most out of your property. Consider consulting an estate planning expert to help you acquire the property and guide you on how to sell. They will also help you in organizing your documents and the probate process. Let ClearEstate lessen the burden you are going through as you mourn the loss of your loved one.

Book a free consultation with us today for total estate property guidance.