Can an Estate Trustee Sell Real Estate for Below Market Value in Ontario?

An estate trustee — sometimes still called an executor — is responsible for winding up an estate, and that often means selling the deceased's home or other real estate. Occasionally, a trustee wants to sell to a family member, accept a quick low offer to avoid the hassle of listing, or simply doesn't run a proper marketing process. The question that follows is a serious one: can an estate trustee legally sell estate real estate for below market value?

Generally, no — not without real justification and, in most cases, without the informed agreement of the people affected. An estate trustee is a fiduciary, meaning they hold a position of trust and are legally obligated to act in the best interests of the estate's beneficiaries, not their own convenience or preferences.

This article explains what that fiduciary duty means in the real estate context, why sales to family members draw extra scrutiny, and how a trustee can protect both the estate and themselves when selling property.

The Fiduciary Duty, Explained

As estate trustee, you're managing someone else's assets, not your own. The law generally expects you to:

• Obtain the best price reasonably achievable for estate property under the circumstances
• Follow a reasonable, documented process to test the market, rather than accepting the first offer that comes along without comparison
• Avoid conflicts of interest, or manage them transparently where they can't be avoided entirely
• Treat all beneficiaries even-handedly, rather than favouring one over another

Selling well below what the property is realistically worth, without a good explanation, can expose a trustee to personal liability to make up the shortfall to the estate — even after the sale itself has closed.

Why Selling to a Family Member Raises the Stakes

Selling estate property to a relative, to another beneficiary, or to the trustee personally isn't automatically improper, but it's treated with heightened suspicion, because the trustee (or someone close to them) is potentially on both sides of the transaction. Beneficiaries who aren't part of that sale have no independent voice protecting their share of the estate's value in that scenario.

Where a trustee wants to sell to themselves, a spouse, or another close family member, the safer path generally includes the following steps.

Steps for a Related-Party Sale

1. Obtain an independent, professional appraisal of the property before agreeing to any price.
2. Disclose the proposed sale, the appraisal, and the relationship to all beneficiaries in writing.
3. Get the informed written consent of all affected beneficiaries, where possible.
4. Consider whether court approval is appropriate in higher-risk or contested situations.
5. Keep thorough records of every step in case the sale is later questioned.

Legitimate Reasons a Sale Price Might Look "Low"

Not every below-expectation sale price signals a problem. Reasonable explanations can include:

• The property needed extensive repairs that were reflected in the negotiated price
• The market genuinely softened between listing and closing
• A faster sale served the estate's overall interest — for example, avoiding ongoing carrying costs, insurance risk on a vacant property, or a deteriorating structure
• Multiple appraisals or a genuinely competitive listing process still produced that result

The protective factor in each of these situations is the same: a documented, reasonable process, not simply the number that ends up on the final agreement.

What Beneficiaries Can Do If They're Concerned

Beneficiaries who believe an estate property was sold too cheaply, or improperly, generally have options, including to:

• [ ] Request a full accounting from the estate trustee
• [ ] Ask direct questions about how the sale price was determined and what marketing or appraisal process was followed
• [ ] Raise concerns in writing before the estate is finalized, rather than after distribution
• [ ] Seek independent legal advice about their options if the trustee doesn't provide adequate answers
• [ ] In serious cases, apply to the court for relief, which can include compensation from the trustee or their removal

Courts take the fiduciary obligations of estate trustees seriously, but a beneficiary's practical position is always stronger when concerns are raised early and clearly, with proper legal advice, rather than after the estate has already been distributed.

How Trustees Can Protect Themselves

The trustee's best protection is the same process that protects beneficiaries: transparency and documentation. Getting an independent appraisal, listing through a licensed realtor where practical, keeping beneficiaries reasonably informed, and getting legal advice before any transaction involving a related party all go a long way toward showing that a sale — even one that closed at a modest price — was handled properly.

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