What Happens to Property when the Owner passes away?
There are a lot things to consider when a partner or loved one passes away, but do you know what you need to do with any property they own? Property ownership can often be the last thing on your mind when dealing with the death of a loved one, but it is often one of the most important issues you need to get right.
Different Types of Property Ownership
When dealing with property and how the death of an owner affects it, you will first need to have an idea of the different types of property ownership that exist. There are three types of property ownership (source:https://www.propertyandlandtitles.vic.gov.au/land-titles/common-terms):
- Sole ownership. This is when a property or parcel of land is owned solely by one single person, they are the only name on the land title held by the land titles office.
- Tenants in common. Ownership of land by two or more people where each person is entitled to occupy the whole of the land in common with the others, but where none of them are entitled to the exclusive possession of the land. On the death of one of the proprietors, their share does not pass on to the survivors, but passes to the executor or administrator of the deceased. You can specify that shares be equal or unequal, between people owning a parcel of land as tenants in common.
- Joint tenants. Ownership of land in common by two or more persons where there is a right of survivorship. That is, upon the death of one joint owner, the land as a whole passes to the survivor(s). Your manner of holding will default to joint proprietorship if you do not specify your preference in the transfer of land document.
You may also have an ownership structure that includes both joint tenancy and tenants in common where a share of a property is held by two parties as joint tenants and the other share of the property is owned by another party as tenants in common with them.
When the ownership is Tenants in Common or sole ownership
As there is no right of survivorship under a tenancy in common ownership structure it is dealt with in the same way as a sole ownership when an owner dies. There need to be legal processes in order for the property ownership to change ownership after death.
With a Last Will and Testament
When dealing with a situation where a property is owned under sole ownership or tenants in common, having an up-to-date and accurate last will and testament is crucial for how a property is handled after death. Just having the will won’t be useful if no-one knows where to find it or the basics of what is in it.
In order for the directions in your will to be followed you will need to assign an executor. If there is no executor then an administrator will need to be nominated by the court.
The executor of the will, will be required to seek a probate from the supreme court of the state the will is held, which solidifies their status as executor before any transfer of title is completed. Probate needs to be completed before any change to the property title or the lodgement of the transfer of land can be completed, regardless of what is in the will. For more information on Probates see: https://www.supremecourt.vic.gov.au/wills-and-probate
Application for probate can take between three to six weeks to process through the supreme court. This could be longer if you don’t use a lawyer to assist with preparing the application to avoid potential mistakes.
What if there isn’t a Last Will and Testament?
If it is discovered that the deceased has no Last Will and Testament then there needs to be some extra processes undertaken before transfer of ownership can occur. These processes are more complex and can take more time.
If there is no will a family member or spouse will need to apply for letters of administration, which is similar to probate but more complex, takes longer and usually involves a lawyer. There is an order for who can apply for letters of administration. The spouse has the first right to apply, followed by the children, then parents and finally siblings.
Obtaining letters of administration grants holders the authority to oversee an estate and the allocation of the assets when there is no will. The process for letters of administration, similar to probate, can take between three to six weeks to go through the supreme court. You will need to allow for additional time if you choose to apply yourself rather than with the help of a lawyer. This is to allow for any possible mistakes in the application.
See this link on applying for Letters of Administration. https://www.supremecourt.vic.gov.au/wills-and-probate/probate-forms/letters-of-administrationintestacy-form-kit
Next steps for Transfer of Property
After the completion of Probate or Letters of Administration, you will then need to finalise the process in order to transfer the property title to the new owner’s name.
The documents you will need to have ready to submit in order to transfer the property title are:
- A complete photocopy of the probate/letters of administration
- A copy of the certificate of title, obtained through a land titles search
- A title search (this isn’t always necessary but is recommended)
- Verification of your identity
- A completed transfer of title application
Each state has different application documents and names of the relevant documents needed but they are all essentially the same. You will also be required to pay any relevant fees to your local state government land titles office.
When ownership is in Joint Tenants
The process of transferring property ownership after death is slightly simpler when the ownership is set as joint tenants. When a property is owned by more than one person as joint tenants, the right of survivorship applies.
The right of survivorship is when a property is owned as joint tenancy and one of these tenants passes away. It allows for the transfer of the deceased share of ownership to the surviving owner or owners.
Despite the right of survivorship applying there is still a process that needs to be adhered to in order to make all transfer of titles official. You will need a few documents in order to get the process and transfer completed:
- A copy of the death certificate
- Verification of Identity
- Copy of the certificate of title
- A title search (not mandatory but recommended by most state land offices)
- The relevant application form or notice of death form as required by your state
- You will also be required to pay the relevant fees with the land title office.
For more information on the relevant forms and fees see: https://www.propertyandlandtitles.vic.gov.au/forms-guides-and-fees/overview
Or contact your local conveyancer who can help you obtain and lodge these documents.