Can Executor purchase property from joint beneficiary?

Casciana

Any advice will be appreciated - sole executor, joint beneficiaries (brother & sister), can the executor buy out the sister’s share of a property within the estate (late mother’s) if the sister is in full agreement that it is a fair market price, or does it have to be put on the open market?
Thanks

Savvy_Sue

If you're in agreement, yes you can do this. However I'd get a proper valuation and an agreement in writing.

Retiredwelshman

Is the executor the brother?
An executor has to administer the estate to the best endeavours of the beneficiaries.
If the executor is not the brother - then what does the brother think of all this?

As far as I am aware there is no legal requirement for the property to have to be put on the open market as long as the offer from the executor is reasonable and all parties agree/

Casciana

There was a Chartered Surveyors Valuation report completed for Probate purposes. The sister disagreed with this and has obtained 5 estate agent valuations. No price has yet been agreed but the sister’s solicitor has insinuated that the property has to go on the open market as due to Self Dealing rules any sale to the executor would be voidable? 

Savvy_Sue

That's why I said "if you're in agreement". 

Yes, there are self-dealing rules, but if your sister finds the price you are willing to pay acceptable, I'm not sure who's going to act to void the sale. That would cost money (and I'm not sure if that would come out of the whole estate, your share or your sister's share). It would also take time. And at the end of the day a house sells for what someone is willing to pay for it. 

At what point did your sister engage a solicitor? Do you have one of your own? Is a civilised conversation with your sister possible? (Remembering a conversation with a beneficiary which went along the lines of "I think we could get more if we took the [unusual and potentially difficult to sell] house off the market even though we've got a firm offer." "Fine. Do you have the time to deal with that, because I and my co-executor do not, plus although we MIGHT get more we might also get less so you would need to run that past your siblings.")

Casciana

Thanks for your reply. 

The house isn’t on the market as yet, but the sister wants it to go on. The other beneficiary (brother and sole executor) doesn’t want to sell, and wants to agree a mutually acceptable private sale to pay her out her share of the property. He has funds available for cash offer, she believes she will get more on open market, but of course she may get less. 

Casciana

Retiredwelshman said:

Is the executor the brother?
An executor has to administer the estate to the best endeavours of the beneficiaries.
If the executor is not the brother - then what does the brother think of all this?

As far as I am aware there is no legal requirement for the property to have to be put on the open market as long as the offer from the executor is reasonable and all parties agree/

Hi 

Yes the brother is sole executor, joint beneficiary with the sister.

Retiredwelshman

Casciana said:

Retiredwelshman said:

Is the executor the brother?
An executor has to administer the estate to the best endeavours of the beneficiaries.
If the executor is not the brother - then what does the brother think of all this?

As far as I am aware there is no legal requirement for the property to have to be put on the open market as long as the offer from the executor is reasonable and all parties agree/

Hi 

Yes the brother is sole executor, joint beneficiary with the sister.

Ok, so what do the 5 valuations come out as - are they formal ones (for purpose of a grant of probate) or just estate agents smelling some business?
Putting the house on the open market will incur fees - how much apart are they cash wise?
Basically the house cannot be 'sold' without the agreement of both parties.

getmore4less

Going on the market does not stop the brother/executor buying it

They just have to better any offer that is proceedable.

Start with offers over the brothers current offer and see where that get you
or brother just offers more till it is not worth the trouble to the sister

Or if brother is convinced they could try a put up or shut up where the brother gets to reduce their offer if none come in and sister take the hit.

TBagpuss

As others have said, it is possible where everyone is in agreement and can agree a price, but the executor is vulnerable if they buy without the property going on the market and the beneficiary then claims that the sale was at an undervalue. 

For that reason, marketing the property to see what level of interest there is and what offers are made makes sense. 

If the highest of the agents valuations is (say) £500K, then put it on the market at that and see what offers you get. If the only offer is for £400K, at that point brother/executor can offer to buy sister's share for £200K (or £205K). On the other hand, if you wind up with a bidding war with people offering much higher than £500K then it will be clear that sister was right, and you could get more. Brother is still free to wait until there is an offer that sister is happy with, and then outbid it.

How much do each of them think it is worth? If they are fairly close then it may be worth brother paying a bit extra to buy at sister's price, and save the estate agents fees  If they are far apart, better to put it n the market and gauge the level of interest .. 

Casciana

The brother has offered the average of all valuations obtained, but the sister wants the highest of the ‘initial marketing prices’ suggested by the estate agents who ‘smelled business’.