When someone passes away, property does not automatically transfer. The process depends on how the property was owned and how the deceased was recorded on title when they originally purchased the property.
In Victoria, legal title to a property can be held by individuals generally in the following ways:
- Sole Proprietor – There is only one owner. If the owner dies, the property forms part of their estate and can be left to anyone in a will or transferred independently.
- Joint Proprietors (Joint Tenants) - If one owner dies, their interest automatically passes to the surviving owner(s). Their share cannot be gifted in a will because it does not form part of their estate.
- Tenants in Common (Equal or Unequal Shares) - Each owner holds a defined share. The deceased’s share forms part of their estate and can be left to anyone in a will or transferred independently.
Joint Proprietors – Application by Surviving Proprietor
If the deceased owned property as a joint proprietor, the surviving owner(s) must lodge an Application by Surviving Proprietor with the Victorian Land Titles Office to remove the deceased from the title.
Whilst this process does not require a Grant of Probate or Letters of Administration, the surviving proprietor must complete an identity check, sign a client authorisation form, produce the original title and sign a Statutory Declaration confirming their relationship to the deceased and evidencing that the deceased has passed away.
If the property has a mortgage, the surviving proprietor must work with the bank to meet their requirements (which may include loan variations) before the Application by Surviving Proprietor can be registered and the title to the property transferred.
Tenants in Common – Application by Legal Personal Representative
If the deceased owned the property solely or as a tenant in common, the Executor or Administrator must lodge an Application by Legal Personal Representative. This process requires either a Grant of Probate or Letters of Administration before the title to the property is able to be transferred.
If the property title is encumbered by a mortgage, the bank will need to provide consent and nominate this title electronically to enable the Application by Legal Personal Representative to be registered on title. There may also be other requirements of a lender.
Once the Application by Legal Personal Representative is registered, the Executor/Administrator has the legal authority to transfer the property, which may include to the beneficiaries or to a purchaser if the property is sold.
In‑Specie Transfer to Beneficiaries
An in‑specie transfer occurs when the property is transferred directly to the beneficiaries of a deceased’s estate rather than being sold. This may arise under:
- a devise in a Will
- the laws of intestacy (where the deceased died without a Will)
- a Deed of Family Arrangement
If the transfer is effected strictly in accordance with the terms of the Will or the laws of intestacy, no stamp duty should be payable on the transfer. However, if the beneficiaries have agreed that one beneficiary will receive a greater share than they would otherwise have been entitled to under the Estate, stamp duty implications may arise. In that situation, an application for a stamp duty exemption or concession may be required, and certain evidentiary requirements would need to be satisfied.
If the property is subject to a mortgage then, unless the beneficiary assumes the liability, the loan will need to be repaid and the mortgage discharged before the property can be transferred.
Key Takeaways
Every estate is unique, and it’s important to understand how property will be dealt with when a loved one passes away. Making informed decisions at the time you become a property owner can help ensure the process is smoother later on and that your wishes are honoured by those you leave behind.
