During a person’s lifetime he/she will accumulate assets as well as liabilities. The assets can be immovable or movable assets or cash. Assets may include a house, vehicles furniture and cash. The liabilities can consist of a home loan, personal loans and/or retail accounts. All the assets and liabilities form part of the estate of the person. At the time of death, the estate of the deceased needs to be reported to the Master of the High Court. The Master of the High Court will appoint an Executor to administer the estate. The duties of the Executor include collecting assets, paying liabilities and distributing the residue to the heirs.
Whether the deceased executed a valid will or not will determine how the estate will be distributed. If the deceased executed a valid will, then the assets will be dealt with in terms of the conditions stipulated in the will. The will may stipulate that the fixed property be transferred to a specific heir or that it be sold. If a person passed away intestate (without leaving a will) then the property can either be transferred to the intestate heirs, provided there is enough cash in the estate to settle liabilities, or the heirs indicate their willingness to settle liabilities (should there not be enough cash) to keep the asset/s. The alternative is for the property to be sold to settle the liabilities.
If the fixed property is transferred to an heir, the Executor will attend to the transfer after the liquidation and distribution account have laid for inspection free from any objections. Although no transfer duty will be payable, the deceased estate will bear the conveyancing cost as well as cost of obtaining rates and levy certificates. The Conveyancer will need to certify, in terms of Section 42(1) of the Administration of Deceased Estates Act, that the transfer is in terms of the liquidation and distribution account which has laid for inspection. Master certified copies of the will and liquidation and distribution account will be lodged together with the other transfer documents at the Deeds Office for registration purposes.
A property will be sold by the Executor in three instances:
- If it is stipulated in the Will; or
- If there is a cash shortfall in the estate and the heirs are unable or unwilling to settle the shortfall; or
- The heirs in the estate request the Executor to sell. However, all the heirs need to be older than 18 years and they all have to consent to the sale.
The Executor can cause the property to be marketed and sold, even before the liquidation and distribution account has laid for inspection. It is however, important to note that a sale agreement can only be signed by the appointed Executor, on behalf of the deceased estate. Any agreement of sale purportedly signed prior to the Executor’s formal appointment is invalid and cannot be ratified.
The sale agreement should include a special condition stating that the sale is subject to approval by the Master of the High Court, and that consent itself require the written consent of all the heirs who have an interest in the property.
The extra requirements (consent by the heirs and the Master of the High Court) for a sale out of deceased estate, inevitably mean that there will be additional delays, both in concluding the sale agreement as well as taking transfer of the property. It is important that a purchaser be advised from the outset that this is an estate transaction and that delays might be experienced.
The purchaser of an estate property needs to be made aware of the “Voetstoots clause”. Voetstoots mean that the seller is selling the property as it stands – a seller will not be liable to a purchaser for patent defects (these are defects which are visible) nor for latent defects (a defect that is hidden and may only become apparent later on). The only defect a seller would be liable for is one that is latent – that he/she had knowledge of and that he/she failed to disclose to the purchaser. In the case of a deceased estate there is no one to disclose to the purchaser and therefore the purchaser should take much more seriously his duty to inspect the property. That, before making an offer, he and/or she should fully apprise him/herself of the true state of the property as he/she will not be in a position to come back later and claim any damages from the Executor as seller.
The costs of the transfer, including normal transfer duty, would be payable by the purchaser. The estate would carry the costs of obtaining rates and levy clearance certificates and cancelling any bonds registered over the property.
The Administration of a Deceased Estate is a complex process and death is a difficult time for family members to cope with all the legal and financial consequences of the death. Our specialised estate department can assist with not only the liquidation of the estate but also the safe and proper transfer of your assets to your beneficiaries.
Contact Mariska Fieberg for all your Estate and Estate Management needs.
- Administration of Estates Act, Act 66 of 1965
- Wills Act, Act 7 of1953
- Intestate Succession Act, Act 81 of 1987
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)