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Increasingly, lawyers are being approached with concerns that a third party has bought a legal share of an estate, including a legal share of their childhood home, at an enforcement agent’s auction and is now threatening to evict the parents and sell the home.
About the sale of estates
There are currently 37 legal shares of some people’s estates sold at enforcement agents’ auctions, with a total value of €320,270. The current auctions concern 37 debtors, their family members, and parents — hundreds of people. There are 45 properties involved in the auctions of the estates. New estate auctions are announced every week.
What does the sale of estates mean?
Put simply, when a person dies, their property is transferred to their successors. Very often, the estate is not divided up, so the successors (spouse, children) are each left a legal share of the estate. If enforcement proceedings are brought against one of the successors, the enforcement agent can attach (seize) this legal share and put it up for auction. Enforcement agents are very keen on doing this.
Strangers buying legal shares: threats and consequences
Then, strangers end up buying a legal share of someone’s childhood home, generally the residence of the debtor’s parents. After the purchase, they go to the doors of the other successors and threaten to put the home up for sale or move in themselves. Usually, they visit the deceased’s partner, who has remained living on the property and whose legal knowledge may not be very extensive. Then the estate is offered for sale at a price many times higher than that at which it was bought from the enforcement agent. And, unfortunately, people pay.
Enforcement agents’ strategy
Selling legal shares of estates is popular with enforcement agents. Why? Because it is a sale of movable property – that is, while the enforcement agents advertise in the auction notices that the estate includes a property (a plot of land with buildings) and sometimes show a picture of the property in the advertisement, they are actually selling movable property – property rights. The sale of movable property differs from the sale of immovable property in several ways.
Challenges in the sale of legal shares
When seizing a property, the property should also be examined beforehand to determine the right price. Interested parties, too, have the right to inspect the property being sold. In the case of an estate sale, there is no such possibility – the interested party has the right to inspect the property being sold, but since this is a legal share of a right, there is no real “property” to inspect until the estate is divided. Thus, the enforcement agent does not have to visit the property with the interested parties, does not have to obtain a court order to enter the property in case of problems, etc. Also, the deadlines are shorter for the sale of movable property, and, most importantly, the enforcement agent can charge an extra fee of up to 3% of the sale price for the sale of immovable property but up to 20% or €6000 for the sale of movable property! Legal shares are currently for sale at, e.g., €60,240, €37,969, €45,000 – more expensive than many real properties and most of the other movable property.
Understanding x/x legal share of an estate
What does x/x legal share of a deceased’s estate mean anyway? Did the enforcement agent sell part of the property? Why are the co-successors not informed of the auction? Why are co-successors threatened at their doors? What to do in a situation like this?
The simple process unveiled
The whole process is actually extremely simple (for the enforcement agent). If it turns out that the debtor has succeeded something, it is the debtor’s property, and the enforcement agent can seize it and put it up for sale. In most cases, this fact comes out when the land register shows that the debtor has become a joint owner of the property with their co-successors.
Dormant estates and unresolved successions
The enforcement agent could check whether the debtor’s parents are deceased and see whether there is a property in the name of the deceased parent. According to the Estonian Tax and Customs Board, there were nearly 16,000 properties in Estonia where the previous owner is deceased, and the new owner has not applied to correct the register entry.
One of the reasons for this is precisely that debtors do not want to show that they have inherited property, nor is it possible to claim land tax from the deceased. In the current auctions, some of the bequeathers have died in 1999, 2004, 2007, which means that in some cases, succession issues have remained unresolved for 24 years.
Comprehending the estate composition
The estate is, in fact, a collection of rights and obligations and includes all the assets of the deceased, including property, cars, money in a bank account, a pension fund, home assets, and liabilities. If the deceased was married and there was a joint property regime between the spouses, the assets registered in the name of the surviving spouse must also be checked.
If the deceased was divorced and the joint property is undivided, the assets registered in the name of the divorced ex-spouse must also be checked to see whether they are part of the joint property. Any debts owed by the deceased should also be included in this “collection”.
Gaps in auction listings
If you look at the enforcement agents’ auction listings, in most cases, only the property is listed. There is no mention of debts, nor is there any information about the deceased’s movable property or their relationship status. So, it is as if just a part of a property is being sold.
Complexities of division
In reality, a part of the collection is being sold. It is up to the successors themselves to reach an agreement on who owns what, and if they fail to do so, the court will divide the property. The specific items or parts of items belonging to each co-successor are determined when the estate is divided. Hence, the fact that a co-successor owns part of the joint estate does not mean that he or she also owns a corresponding legal share of the individual items forming the estate.
Hidden realities in auction listings
It is possible that the property will be divided in such a way that the immovable property goes to one person, the car(s) to another and the books/wines/animals to a third. The property listed in the auction listing may not always be the most valuable. Debts also go together with the assets. Looking at the auctions currently on the enforcement agents’ auction site, only one of the advertisements states that a loan payment obligation is included. All the other auctions only “sell” the property.
Rights of surviving spouses
Co-successors should not be intimidated by someone claiming to move into a property of which a part belongs in an estate. A buyer of a legal share cannot say he owns part of the property and claim his room in the house. Yes, he or she can make an offer to divide the estate, but if the other co-owners do not agree, the court will divide the property.
Procedures for resolution
There are procedures and ways for resolving conflict, and they include:
- Facing confrontations
What to do if a gentleman who has joined the successors instead of the debtor comes to your door and starts making unreasonable demands? It is difficult to get rid of him completely – once the enforcement agent has conducted the proceedings in accordance with the law, he must be heard as well.
After that, it is wise to review your succession matters with an expert to assess the real value of the assets and make a proposal for the division of the estate. If no agreement is reached, the matter will have to be referred to the court, which will decide whether and how much of what is due to whom.
- Legal recourse
In court, it is possible to demand for the estate to be divided and for the common ownership to be terminated. You can ask for compensation to be paid to the “alien” successor, or you can ask for the property to be sold at a public auction or at an auction between co-owners. If it is indeed someone’s home, it is reasonable to leave the property to one of the co-owners and award compensation to the others.
- Proactive measures
All in all, it is a good idea to review your succession matters. If the estate has not been divided, we recommend that you divide it up or at least sit down with your co-successors and discuss what to do with the inherited property and other assets. It is wiser and cheaper to find a solution before the enforcement agent has sold part of the assets to a third party. Even if a new face has emerged in the circle of successors, it is worth bearing in mind that there are dozens, if not hundreds, of families in a similar situation. Be sure to contact expert attorneys for help, and do not be discouraged by threats. You can reach out to Hedman law firm for advice on this matter.