Generally, the process of buying and selling a property can be quite tedious, but have you ever wondered how to sell a property that belongs to someone who is deceased? There is a legal maxim that reads, "nemo dat quad non habet" which means no one gives what they do not own. In the context of sale and purchase of a property, it means no one can transfer a better title than he himself has.
So when someone dies, an issue that may arise is who will be in charge of the administration of the deceased's estate? The answer to this issue follows two distinct paths that depend on the existence of a will left behind by the deceased. This is because 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.
In this article, we will discuss the matter in two main parts as follows:
Extraction of Grant of Probate or Letter of Administration; and
Power of the administrator/executor to sell the deceased's property by way of an Order for Sale.
1. EXTRACTION OF GRANT OF PROBATE OR LETTER OF ADMINISTRATION
Grant of probate and letter of administration are the instruments that trigger the procedure of estate administration. Think of these instruments like a driver's license. You need to obtain a driver's license in order to prove that you are qualified to drive. Same goes to administrating a deceased's estate. Once a Grant of Probate or Letter of Administration has been extracted, then only the representative is authorised to administer the deceased's assets. Despite that, the two instruments are so much different to one another.
Where the deceased died intestate (without leaving a will) - Letter of Administration
The representative who intends to manage the estate of a deceased who died without leaving a will may apply for a grant of Letter of Administration (LA). This person is called as an "administrator". This can be referred to Section 30 of the Probate and Administration Act 1959. Based on the interpretation under Section 2 of the Probate and Administration Act 1959, an "administrator" is a person to whom administration is granted and “administration” refers to Letter of Administration issued by the Court, whether general or limited, or with the Will affixed or otherwise enabling the person named therein to administer the deceased person's estate in conformity with law.
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Where the deceased died testate (leaving a will) - Grant of Probate
Where the deceased passed away testate, the executor named in the will should apply for a Grant of Probate from the High Court. According to Section 2 of the Probate and Administration Act 1959, an "executor" refers to a person to whom the testator has entrusted to execute the will and includes a person deemed to be appointed executor in respect of settled land. The executor should apply for a Grant of Probate from the high court.
If there is a valid will, but either the executor named in the will had predeceased the testator or no executor had been appointed in the will, the person intending to be the administrator may apply for grant of Letters of Administration with the will annexed at a High Court (Section 16 of the PAA 1959).
It is noteworthy that the Grant of Probate and Letter of Administration applies only to non-Muslim citizens in Malaysia. For Muslim citizens, a Faraid Certificate from the Syariah High Court is required.
2. POWER OF THE ADMINISTRATOR/EXECUTOR TO SELL THE DECEASED'S PROPERTY
So we have explored the part pertaining to grant of probate and letter of administration, but what happens after the extraction of these instruments? How does the Administrator or Executor transfer the property to the beneficiary or a third-party purchaser?
Firstly, the personal representative will have to register the vesting of the property forming part of the estate of the deceased to himself as representative at the land office. This is prescribed under Section 346, National Land Code 1965. The land office will endorse on the respective title deed that the property is vested in the personal representative “as representative”.
The second step will be depending on whether the deceased died testate or intestate.
Deceased died intestate
If the deceased has died intestate, in order to sell the deceased’s property to a third party purchaser, the personal representative will need to obtain an Order for Sale under Section 60 of the PAA 1959 from the High Court sanctioning the transfer before the presentation of the transfer can take place at the land office.
In short, an administrator is required to apply for an Order for Sale from the Court to empower him to sell the deceased’s property.
Deceased died testate
In the case where the deceased died testate, the executor may sell the property of the deceased as he thinks proper without a Court’s Order for Sale unless there is an express restriction prescribed in the will of the deceased virtue to the Probate and Administration Act 1959.
Nevertheless, some Land Offices are quite reluctant to register any instrument of transfer signed by the executor without any Order of Court that authorises the executor to act as so. It has been the practice of some Land Offices that the instrument of transfer signed by the executor will not be registered without an Order of Court, unless the will has expressly conferred the power to the executor to sell the property. Thus, it is prudent for the lawyer to check with the land office concerned for further clarification prior to the registration of the transfer.
There are three circumstances where the executor is required to obtain a Court’s Order for Sale prior to carrying out the sale and purchase transaction. Firstly, in circumstances where the executor is unable to comply or fulfil the expressed restrictions stipulated under the will. The executor must obtain consent from the relevant beneficiaries as mentioned in the will and also an Order of the Court. Once consent is obtained, the executor notwithstanding the restrictions imposed, may sell the property as long as it is in accordance with the Order of the Court. Next, in situations where the Land Office requires the Court’s Order for Sale and lastly, when there is a clear clause in the will requiring that a Court’s Order for Sale should be obtained.
In conclusion, the process of selling a property belong to a deceased person is depending on whether he had died leaving a will or without a will. The whole estate administration process must be well-planned properly executed in order to make sure that the deceased's assets can be rightfully distributed or disposed.