selling property without probate

[nimrod2020]

The scenario:-

3 brothers buy and run a farm, living there until they pass away.
The property is not registered with the Land Registry.
The brothers are all tenants in common with equal shares each.
The brothers never marry, and there are no children.
All 3 brothers make identical wills, leaving their particular share directly to 3 named beneficiaries (nieces and nephew).

Brother A passes away in 2019. Probate is not applied for.
Brother B passes away in 2021. Probate is not applied for.
Brother C passes away in 2024. Probate is applied for by a solicitor but only for Brother C, and Letters of Administration (with will) were granted to the 3 beneficiaries as Administrators.


Questions:

1. Can the administrators sell the entire property without having applied for probate for 2 of the brothers ?

2. The High Court's official notice of Administration names the 3 beneficiaries as administrators, but does not appear to distinguish between them and therefore the beneficiaries believe (assume) that they each have "equal authority". If correct, does that mean that any 2 of them can "outvote" the third administrator ?


many thanks in advance for your advice.

[atticus]

They are the administrators of the estate of brother C. They have no authority in respect of the estates of A and B. Probate should be obtained in respect of their estates.

[Pezza54]

Hi
Welcome to LB

Please read "Owning unregistered land without title deeds: affirming your ownership" at www.mills-reeve.com
It is not uncommon for rural land to be unregistered. Rural land is not sold as often as urban land
The buyer's conveyancer will want to see proof of ownership of the farm

Is there any documentation available that shows the brothers owned the farm as tenants in common?
The land will need to be registered when it is sold

In the context of executors the majority rule. So the answer to your question 2 is "yes"

[Pezza54]

Please read the article "Understanding Capital Gains Tax on Inherited Property. What is Capital Gains Tax?" at www.the-probate-network.co.uk
In particular the paragraphs under the headings "How does Capital Gains Tax apply to inherited property?" and "Who pays CGT on inherited property?"

If the farm is sold before legal ownership is transferred to the nieces and nephew, then the estates of A and B may be liable for CGT if the sale price is more than the probate value

[nimrod2020]

Please read the article "Understanding Capital Gains Tax on Inherited Property. What is Capital Gains Tax?" at www.the-probate-network.co.uk
In particular the paragraphs under the headings "How does Capital Gains Tax apply to inherited property?" and "Who pays CGT on inherited property?"

If the farm is sold before legal ownership is transferred to the nieces and nephew, then the estates of A and B may be liable for CGT if the sale price is more than the probate value

Pezza: Thank you for pointers to both articles and web sites, which I found excellent and thought provoking.


Beneficiary 1 has announced, without consultation with Beneficiaries 2+3 (all Administrators), that he intends that his own son will buy the farm house; following which he himself (Beneficiary 1) will move into the farm house himself.

Beneficiaries 2+3 are quite upset, they have not agreed to the sale, and are convinced that something inappropriate is going on. They were also surprised by the (RICS) valuation of the farm house, which they thought was "on the low side", and are looking for a new valuation.

CGT would be an unwelcome, and unforeseen, complication for them all.

[nimrod2020]

They are the administrators of the estate of brother C. They have no authority in respect of the estates of A and B. Probate should be obtained in respect of their estates.

Atticus: many thanks for your reply. I had assumed that probate would be required, but as it wasn't being pursued, I wondered if there was some "get out clause" that applied in their case (especially as there was a solicitor involved)..

What are the implications of them not obtaining probate for brothers A + B, and then selling the farm / land ? Would they be venturing into criminality ? Who would know ?

[atticus]

No crime, they simply have no power to sell the other brothers' interests.

As to who would know, well any competent solicitor acting for a buyer would say this is not acceptable, and the Land Registry would refuse to register a purported transfer.

[nimrod2020]

No crime, they simply have no power to sell the other brothers' interests.

As to who would know, well any competent solicitor acting for a buyer would say this is not acceptable, and the Land Registry would refuse to register a purported transfer.

Interesting; thank you.

I'm now purely speculating: If it turns out that probate was not applied for for the 2 other brothers because their wills could not be found (etc.) :-

1. then does that mean that their shares of the assets (1 third each) would then have to be distributed according to intestacy rules (no previous wills), and ?

2. If yes to above, would their solicitor (who applied for probate for Brother 3) have been under any obligation to have contacted any new beneficiaries ?

[nimrod2020]

Hi
Welcome to LB

Hello Pezza, Thank you for your kind welcome to LB.

Atticus and yourself have provided me with excellent answers and further pointers.

I am on the outside of a difficult situation with arms length family.

Within the overall story, there are other legal complications that I may need to post about in the near future.

Many thanks.

[atticus]

reply to q1 in post 8: yes.

[Pezza54]

In post 1 you stated all 3 brothers made identical wills. It seems likely the wills were made at the same time and probably signed by the same witnesses. The witnesses to brother C's will should be contacted to and asked if they recall signing A and B's wills

Does beneficiary 1 intend that his son just buys the farmhouse and garden and not the agricultural land and any farm buildings?

If so, HMRC are unlikely to accept the farmhouse as mixed use for SDLT. The rates for residential SDLT are significantly higher than mixed use

[nimrod2020]

In post 1 you stated all 3 brothers made identical wills. It seems likely the wills were made at the same time and probably signed by the same witnesses. The witnesses to brother C's will should be contacted to and asked if they recall signing A and B's wills

Does beneficiary 1 intend that his son just buys the farmhouse and garden and not the agricultural land and any farm buildings?

If so, HMRC are unlikely to accept the farmhouse as mixed use for SDLT. The rates for residential SDLT are significantly higher than mixed use

In case it makes a difference, we are all based in Wales.



Beneficiary 1 is not disclosing his full intentions to the other 2 beneficiaries (despite being repeatedly told by a solicitor that he must do so). He will typically want to do whatever is quickest and cheapest in the short term for him, and "don't worry" about any potential consequences.
He recently surprised the other 2 beneficiaries with the news that his son will buy the farm (any sale had not even been discussed). We assume at this moment that he'll get his son to buy only the farmhouse and no other agricultural outbuildings or fields. His son will need a mortgage, and has already spoken to a bank.

The RICS valuation for probate purposes, was carried out just over 1 year ago. It valued the farmhouse at 10% below what I believe is the (Wales) SDLT threshold of £225,000
As I stated in post 5 above, Beneficiaries 2+3 are looking into a new valuation, both for the entire farm, and also the farm house. I note the earlier point regarding CGT which I will convey to them soon.

I suspect that Beneficiary 1 believes that he himself is inheriting 1/3 of the farmhouse from his uncle, but needs some money to buy out the other 2 beneficiaries (hence the need for his son to raise the money via a loan / mortgage). Beneficiary 1 will like to treat the transaction as some sort of semi-funded inheritance, and therefore, in his mind, no need to tell anybody else (HMRC / Land Registry / etc.).


It's all a mess, and quite capable of getting much worse.

Any further pointers would be appreciated.

[Pezza54]

Please read the article "Selling part of a farm while retaining the farmhouse" at www.godwins-law.co.uk

Separating the farmhouse from the rest of the farm may devalue the land and farm buildings

There may be problems to overcome with access, utilities etc

Selling fees will be higher

[Pezza54]

You are right. The threshold for Land Transaction Tax (LTT) in Wales is £225k for both residential and non-residential land
There's no first time buyers relief in Wales

[nimrod2020]

Please read the article "Selling part of a farm while retaining the farmhouse" at www.god-wins.law.co.uk

Separating the farmhouse from the rest of the farm may devalue the land and farm buildings

There may be problems to overcome with access, utilities etc

Selling fees will be higher

Thank you Pezza,

I found it at https://www.godwins-law.co.uk/2024/0...the-farmhouse/

Knowing the actual property and land, I suspect that separating off the farmhouse will indeed result in a decrease in the overall value of the estate.