Sale of property of a deceased person

©The Sun
by Bernard Kok

(a) Who can sell a deceased’s property?

The personal representative of the estate of a deceased who left a Will is called an executor whereas the personal representative of the estate of a deceased who died without a will is called an administrator.

Only personal representative of a deceased’s estate will have the capacity to enter into a sale and purchase agreement to dispose of the deceased’s property.

(b) Where there is more than one personal representative

All the personal representatives of a deceased will have to agree and sign the sale and purchase agreement. In the absence of consensus of mind among the personal representatives for the aforesaid transactions, directions of court are required.

(c) Grant of Probate or Grant of Letters of Administration extracted from Court

It is important that the personal representative has extracted the Grant of Probate or the Grant of Letters of Administration from the Court at the time of signing of the sale and purchase agreement. Without the Grant of Probate or the Grant of Letters of Administration, the Property cannot be registered in the name of the executor or the administrator and as a result of which, the instrument of transfer executed by the executor or the administrator in favour of a purchaser cannot be registered in the land office when the time comes for the completion of the sale and purchase agreement.

(d) Whether application to Court for sanction necessary

In the case of an executor, the Probate and Administration Act provides that the executor may sell the deceased’s property unless there is restriction in the deceased’s will for the executor to do so. In such circumstances, the executor needs not apply to Court to empower him to sell the deceased’s property.

Notwithstanding the aforesaid statutory provision, it has been the practice of some land offices that unless the deceased’s will expressly confer powers to the executor to sell the deceased’s property, those land offices will not register instrument of transfer signed by the executor in favour of a purchaser without an Order of Court authorising the executor to do so. It is prudent for a purchaser to check with his lawyer the practice of the land office concerned and prepare the sale and purchase accordingly.

In the case of an administrator, the Probate and Administration Act requires the administrator to apply to Court to empower him to sell the deceased’s property.

(e) Conditional contract

It is common practice that when an Order of Court is required, the executor or the administrator will enter into a conditional sale and purchase agreement subject to the Order of Court being obtained within a certain period of time and to provide for the termination of the sale and purchase agreement if the Order of Court cannot be obtained.

It is important for the purchaser to make sure that the completion date is calculated from the date his lawyer received the sealed copy of the Order of Court as the instrument of transfer needs to be accompanied by the sealed copy of the Order of Court when it is presented to the Land Office for registration.

(f) Beneficiaries’ interest versus purchaser’s interest

It has been decided by the Court that a purchaser under a conditional contract was perfectly well aware that his contract subject to the Court’s approval and that the purchaser has taken the risk of losing their bargain if the Court refused to grant such an approval. The Court, in considering the personal representative’s application for sanction to sell the deceased’s property, must protect the rights of the beneficiaries as opposed to the interests of the purchasers.

(g) Best possible price

It is the duty of the personal representative to obtain the best possible price. The Court is concerned that the purchase price is a reasonable one not at the time of the sale and purchase agreement but at the time of hearing of the application.

There are cases where the Court refused to sanction the sale by the personal representative when the beneficiaries  objected on the ground that the purchase price in the sale and purchase agreement is below market value.

The Court had held that when most of the beneficiaries had not been consulted nor their consent been obtained, the personal representative should have applied the common sense rule of calling for a valuation report. That would have assisted the personal representative in considering whether the purchase price was reasonable as the best possible price.

(h) Beneficiaries’ consent

One of the most common grounds to support such an application would be that all the beneficiaries of the deceased’s estate consented to the sale.

The beneficiaries’ consent will have direct bearing on the outcome of the hearing of such an application. The Court has decided that where all the beneficiaries are of sound mind and above 18 years old and have consented to the sale, the Court will be entitled to assume that the price offered is the best obtainable.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysiawww.malaysianbar.org.my.

Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should, therefore, seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corp Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.