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Guide on Property Transactions involving Deceased Owners

Properties Of Deceased Owners

What To Do

There are a number of considerations which should be noted before the property is being transacted upon the death of a proprietor of a property. 

WHAT HAPPENS UPON THE DEMISE OF A PERSON?

The first question to address is who can take over the administration of the deceased’s estate? This will be dependent on either of the following three scenarios:-

1) Is the property is held by the deceased person alone or with one or more persons? If it is the latter, what is the manner of holding?

2) The deceased had drawn up a Will at prior to his death; or 

3) The deceased had not drawn up a Will at prior to his death.

(1) Manner of Holding

If the property is held by the deceased together with one or more persons, then it would be imperative to note whether the deceased had held the property as joint tenants or tenants- in-common with the other proprietors.

In the event the property was held as joint tenants by the deceased and other owners who survive him or her, then the Rule of Survivorship will take place, such that the surviving owners of the property would take over the property as registered proprietors.

A Notice of Death would need to be filed with the Singapore Land Authority (“SLA”) by the surviving owners, attaching a certified-true-copy of the death certificate of the deceased in the application to SLA.

However if the property was held as tenants-in-common by the deceased and other owners who survive him or her, unlike that of a joint tenancy, the Rule of Survivorship does not apply and it will be dependent on scenario (2) or (3), which is discussed next.

(2) The Deceased had Drawn Up a Will

The executor(s) of estate would have been named and set out according to the Will. In this regard, the executor(s) would then have to engage a law firm that provide services for the application for a Grant of Probate from the relevant courts in Singapore.

Once the Grant of Probate is issued by the court, the property or share in property that the deceased had left behind after his or her demise could then be dealt with. The executor(s) could either (i) transfer the property or share in property to the beneficiaries named in the will directly, or (ii) in the event of a sale of a property, file a Transmission Application with the SLA so that the executor(s) could be the “temporary” proprietors on the title of the property to be able to dispose of the property.

In the latter example, there must however be a power of sale contained in the will empowering the executor(s) to do so in the first place.

(3) The Deceased had NOT Drawn Up a Will

In the event the deceased had not left a Will, then the administrator(s) of the estate would then have to engage a law firm that provide services for the application for a Grant of Letters of Administration from relevant courts in Singapore. However, to apply for the Letters of Administration, the identity of the administrator(s) must be established. According to Section 18 of the Probate and Administration Act (PAA), the court may grant Letters of Administration to the deceased’s spouse, next-of-kin, or any of them individually or jointly. Particularly, the ISA sets out seven (7) classes of persons who, in descending order of priority, are entitled to apply for this grant. They are the deceased’s:

1. Spouse;

2. Children;

3. Parents;

4. Siblings;

5. Nephews and nieces;

6. Grandparents; and

7. Uncles and aunts.

Infants (i.e. persons below 21 years old) and persons who are mentally disordered are not allowed to be administrators. Where a person entitled to a grant is an infant, such a grant will be made to his or her guardian.

Similarly, where a person entitled to a grant is mentally disordered, such a grant will be made to the person who has been legally entrusted with the mentally disordered person’s affairs.

The court may appoint up to 4 administrators. If one or more of the beneficiaries of the estate is below 21 years of age, then either at least 2 administrators, or a trust corporation, must be appointed. Where there are multiple administrators, they will act jointly to administer the estate. This means that they will have to act unanimously at all times.

Once the Letters of Administration is issued by the court, the property or share in property that the deceased had left behind after his or her demise could then be dealt with. The administrator(s) could either then (i) transfer the property or share in property to the beneficiaries in accordance with the Intestate Succession Act, or (ii) in the event of a sale of a property, file a Transmission Application with the SLA so that the administrator(s) could be the “temporary” proprietors on the title of the property to be able to dispose of the property.

SECTION 35(2), CONVEYANCING AND LAW OF PROPERTY ACT

Having considered the preceding three scenarios, thought must also be given to Section 35(2) of the Conveyancing and Law of Property Act (“CLPA”), which states as follow:-

(2) No sale or mortgage of land belonging to the estate of a deceased person shall be made by the legal personal representative of that person after the expiration of 6 years from his death unless with the sanction of the court, or unless the sale or mortgage is made in pursuance of a power of sale or trust for sale or mortgage which is expressly contained in or may be implied from the terms of the will of the deceased.

Therefore, in the event the administrators or the executors of the deceased’s estate decide to dispose of the property, another consideration is the date of demise of the deceased as it may impede on the disposition of the property should the death occur more than six (6) years prior to the transaction, save for the exceptions provided for in the provision of Section 35(2) CLPA.

EXISTING MORTGAGE

Lastly, another consideration is whether or not the property had been mortgaged by the deceased. Where the property was co-owned between the deceased together with one or more persons and upon the death of a proprietor, most people are not aware that this results to an event of default under the terms of the mortgage. Who would then be settling the outstanding loans and debts?

In reality, the financiers are unlikely to recall the loan but rather, require the surviving co-owners to take up a fresh loan or to restructure the loan (i.e. re-financing). Given strict MAS’ and banks’ financing rules and requirements with regard to debt servicing ratio today, the question then lies with whether the surviving co-owners would be able to re-finance the mortgage.

CONCLUSION

In dealing with a deceased persons estate, a lot of thought and consideration must be placed prior to any transaction, particularly when it is relating to a transaction for sale and purchase. 

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