Can an Executor Buy the House From the Estate in Ontario?

If you are the executor and also a child or relative of the deceased, buying the family home can feel natural. You know the house and may want to keep it in the family. But you are on both sides of the deal, which is why this kind of sale gets close attention.

This article explains the rules that apply in Ontario, the role of consent and valuation, and when to get legal advice.

First, is the house part of the estate?

Property the deceased owned alone generally vests in the personal representative as trustee, subject to payment of debts. A house held with a right of survivorship, such as one owned as joint tenants, is different. It passes to the survivor and does not form part of the estate the executor sells.

If the home is part of the estate, probate is normally needed when the deceased owned real property. Confirm who has authority to sell before any offer is discussed.

The conflict problem

An executor must sell for the benefit of the estate, but a buyer wants a low price. As a general principle from court decisions, a trustee who buys trust property faces strict scrutiny, and a sale may be challenged unless the beneficiaries agree or the court approves it. This is not set out in one section of a statute, so the outcome depends on the facts.

The statute does give the executor power to sell real property to pay debts and also to distribute or divide the estate. That power does not remove the conflict when the buyer is the executor.

Consent and the beneficiaries

A sale made only to distribute the estate needs the approval of the majority of the persons beneficially entitled. For minors, approval is given by the Children's Lawyer, and for mentally incapable persons by the Public Guardian and Trustee. A judge may dispense with the beneficiaries' concurrence.

A bare majority may still leave a minority feeling unfairly treated. Many families get every beneficiary to sign informed, written consent, and many also seek legal advice for each person. Whether majority approval is enough where the buyer is the executor depends on the facts, so check with a lawyer.

Valuation and fairness

How the house should be valued depends on your situation, so it is worth confirming with a lawyer. In practice, a fair price is easier to defend when it rests on independent evidence.

• Get a written appraisal from an independent appraiser, not one chosen only by the buying executor.
• Consider exposing the home to the open market, so a real price is tested.
• Give every beneficiary the appraisal and the proposed terms before they decide.
• Keep records of every step. Estate trustees must keep accurate records of the estate's assets and transactions.
• Remember that when accounts are passed, a beneficiary can object to the accounts, including the compensation claimed, and the judge may make full inquiry into the deceased's property.

If a beneficiary later objects, the court on a passing of accounts may make full inquiry and order the executor to pay such sum as is just. An executor can also be removed by the Superior Court of Justice on application by an interested person.

What to do next

• Confirm whether the home is in the estate or passes by survivorship.
• List every beneficiary, including any minors or incapable persons.
• Obtain an independent appraisal and share it.
• Ask whether the debts have been dealt with, since the property is held subject to payment of debts.
• Get legal advice on the consent route and whether to seek court approval before you sign anything.
• Note timing: real property not conveyed or distributed within three years of death vests in the beneficiaries unless a caution is registered, which delays vesting for three years from registration.

Frequently asked questions