Selling an estate home in Muskoka: process, tax and who does what

Selling a home that belongs to an estate has two tracks that run alongside each other. One is the legal process that gives someone the authority to act for the estate. The other is the real estate sale: preparing the property, setting terms, showing it and closing. This guide explains both in general terms and covers the Ontario estate administration tax as the province’s page states it. Throughout, the same rule applies: confirm each step with an estate lawyer.

Nothing here is legal or tax advice. The details depend on the will and the estate and a lawyer who handles estates can answer them.

Who does what

Three groups usually take part in an estate home sale.

The estate trustee

The estate trustee, often called the executor in everyday language, is the person who acts for the estate. In general terms the trustee deals with the estate’s assets and debts and carries out the will or follows the law where there is no will. The trustee signs the documents that sell the home, once the legal authority is in place. Which court steps the trustee must complete before a sale depends on the estate. The sources checked for this site did not state the application steps for a certificate of appointment of estate trustee, so ask an estate lawyer what is needed and in what order.

The estate lawyer

An estate lawyer advises the trustee on the legal process, the tax and the sale. The lawyer also prepares or reviews the court application and works with the real estate lawyer on the closing if they are different people. Ask the estate lawyer these early questions:

• What authority does the trustee need before the home can be listed?
• What authority is needed before an agreement of purchase and sale is signed?
• When is the estate administration tax paid and in what amount?
• How are the proceeds handled after closing?
• Are there other approvals or consents needed from beneficiaries?

The real estate agent

The agent advises on preparing the property, setting a listing approach, showing and negotiation. The agent does not give legal advice. Kirby can work with the estate lawyer and the trustee and can arrange a valuation of the property. Because this site shows no price figures, a valuation is a conversation about the actual property.

Ontario estate administration tax

The Ontario page on estate administration tax states the following:

• There is no tax where the estate value is $50,000 or less, for applications on or after January 1, 2020. Estates at or under $50,000 must still file an Estate Information Return within 180 days.
• For estates over $50,000, the tax is $15 for every $1,000, with partial thousands counted as full thousands.
• Before January 1, 2020, the rates were $5 per $1,000 on the first $50,000 and $15 per $1,000 above $50,000, with no tax at $1,000 or less.
• The tax is paid as a deposit when applying for an estate certificate from the Superior Court of Justice.
• A refund of the deposit is granted only if the certificate of appointment has not yet been issued by the court office.

How the value of the estate is counted, including the home and other assets, is a question for the estate lawyer. This guide does not work out the tax for any property, because it shows no price figures. The blog post on estate administration tax explains the same rows with examples of the questions to ask.

The sale process in order

The order below is a general outline. The estate lawyer confirms what comes first.

1. Confirm authority. The trustee and the estate lawyer confirm what legal authority is in place and what is still needed before a listing or an agreement.
2. Secure the property. Arrange insurance suited to a vacant property, heat or winterizing, locks and routine checks and keep property tax and utilities current. Ask the insurer what it requires.
3. Gather documents. Collect the survey, permits, septic records, tax bills and any agreements for shared roads or docks.
4. Review the property. Walk it with the agent to decide what to repair, clear or leave. Decide who may enter and who holds keys.
5. Value and plan. Ask for a valuation through the home valuation page and agree on the approach with the trustee and lawyer.
6. List and show. Showing arrangements need the trustee’s approval and, where needed, the beneficiaries’ awareness.
7. Negotiate and sign. The trustee signs the agreement once the lawyer confirms authority.
8. Close. The real estate lawyer handles title and funds and the estate lawyer handles how proceeds flow to the estate.

Land transfer tax

The buyer pays land transfer tax on a purchase. The Ontario schedule is 0.5% up to and including $55,000, 1.0% over $55,000 up to and including $250,000, 1.5% over $250,000 up to and including $400,000 and 2.0% over $400,000, with 2.5% over $2,000,000 where the land has one or two single family residences. Ontario’s page says buyers in the City of Toronto may also pay the city’s own tax. The estate is the seller, so this is usually a buyer’s cost. The land transfer tax calculator shows a buyer’s estimate.

Documents that help a buyer and a lawyer

A property in Muskoka often comes with items a buyer will ask about. Having them ready helps the sale move steadily. The estate may not hold all of them and the lawyer or the municipality can help find what exists.

• Survey and plan of the lot.
• Building permits and final approvals.
• Septic permit and inspection records. In Huntsville the Town issues septic permits through its Cloudpermit portal. In Bracebridge the application fee is $450 or $200 if only a tank is replaced. In Gravenhurst installing or repairing a sewage system needs a building permit.
• Agreements for a shared road, a right of way or a dock.
• Property tax bills and the latest MPAC assessment notice.
• Any approvals for docks and boathouses.

If the property is a cottage, the municipality that covers it sets the rules for docks and septic, so ask it for the file on the address.

A waterfront or seasonal estate property

A Muskoka estate often includes a cottage or waterfront home. These properties carry extra points for the lawyer and the buyer’s lawyer to check:

• The shoreline strip. Ontario policy PL 4.11.03 describes Crown shoreline reserves and says shore road allowances inside municipalities are under municipal jurisdiction under subsection 28(2) of the Municipal Act. The sources describe jurisdiction and not ownership, so ask the lawyer how the strip is treated.
• The dock. Section 10 of the Canadian Navigable Waters Act, headed Application or notice, lets an owner deposit information and publish a notice instead of applying for approval. Records of what was done for the existing dock help a buyer.
• The septic system. Muskoka Lakes runs a sewage system inspection program and Lake of Bays inspects waterfront systems every 10 years, counted from the last inspection. Records of past inspections help.
• The classification. MPAC lists codes such as 391 and 392 and 395 for seasonal or recreational dwellings and 313 for a year-round residence on water. The code does not by itself say what the building is permitted to be used for.
• Access. Private roads and water-only access need agreements and records.

The waterfront and cottages guide lists these questions in full.

Contents of the home

Most estate homes hold furniture, papers and personal items that need decisions before the property is shown. Decisions about who may take items belong to the trustee and the estate lawyer and the agent does not make them. A practical approach is to agree a written plan first:

• Which items stay in the home until the sale closes.
• Which items beneficiaries may collect and when.
• Which items are donated, sold or discarded and who records that.
• How valuables and important papers are stored safely.
• Who has keys and how entry is recorded.

For a cottage, add the boats, docks, furniture and equipment that stay on the property or sit in storage. Ask the lawyer whether the agreement of purchase and sale should list what is included, since a clear list prevents later questions. Clearing a property takes time, so allow for it before photographs and showings.

Communicating with beneficiaries

Several people can have an interest in the outcome of an estate sale. The trustee decides what to share and when, on the lawyer’s advice. Agents and lawyers can help by keeping the sale steps simple and written down: what is happening, what comes next and who to ask. Questions that often help:

• Who needs to be told when the home is listed and when an offer arrives?
• What does the lawyer need in writing before an offer is accepted?
• How will the closing date be chosen, given the court timeline and the buyer’s needs?

Looking after the property while the estate works

Time often passes between the date an estate begins and the date the home sells. During that time the trustee remains responsible for the property in practice. Questions to settle with the lawyer and the insurer:

• Is the insurance in the right name and does it cover a vacant property?
• Who checks the property, how often and what do they record?
• How is heat managed in cold months and are pipes protected?
• Who pays property tax, utilities and upkeep from the estate?
• For a cottage, who handles docks, water levels and access? Muskoka Lakes states that lake levels are controlled by the dams in Port Carling and Bala, with operational decisions made by MNRF.

Timing and closing dates

The sources checked did not state how long the court process takes, so the timeline is a question for the estate lawyer. What the agent can do is plan the property side around it. Ask the lawyer for the earliest date on which an agreement can be signed. Then ask the agent how to set a closing date that fits the buyer and the estate. A buyer who needs a firm date and an estate that cannot yet give one are in different positions and that difference is better discussed before an offer arrives than after. A conditional offer is one route and your lawyer explains how it works.

Questions for the first call

Bring this list to a first call with an estate lawyer and a real estate agent:

1. What authority does the trustee have today and what is still needed?
2. What is the timeline for the court process?
3. When and how is estate administration tax paid?
4. Who may list the property and sign an agreement?
5. Who looks after the property and who pays?
6. What documents exist for the property?
7. Are any beneficiaries living in the home or holding keys?
8. What should the real estate lawyer know about the estate?

Next step

Start with the estate lawyer, then talk to Kirby about the property. Ask Kirby to speak with your lawyer about the real estate side, to arrange a valuation and to help you plan the sale. The sellers page explains the sale process and the contact page reaches Kirby. The community guides for Huntsville, Bracebridge and Gravenhurst list what each municipality’s pages state about permits and septic.