Ontario’s three-year estate rule could change who has the authority to sign the MLS listing agreement and Agreement of Purchase and Sale. Here’s what every real estate agent should know.
Grandma passed away four years ago. Her house is still registered in her name, and the family has finally decided it’s time to sell.
Her son calls you to list the property. He tells you he’s the estate trustee, has the Certificate of Appointment of Estate Trustee, and is ready to sign the MLS listing agreement.
Sounds straightforward, right?
Not so fast.
Did you know that Ontario has a law that can automatically vest a deceased person’s real estate in the beneficiaries after three years?
And depending on the circumstances, that could mean Grandma’s son may no longer have the authority to sell the house on his own.
It’s an important issue that every real estate agent should understand before taking an estate listing.
What Happens Three Years After Grandma Dies?
Under section 9(1) of Ontario’s Estates Administration Act, if real property has not been sold, conveyed, divided, or distributed within three years of the owner’s death, the property can automatically vest in the beneficiaries entitled to receive it.
In simple terms, the beneficiaries may become legally entitled to the property without the estate trustee ever signing a transfer.
Let’s look at an example.
Grandma dies on June 1, 2023. She leaves her house to her three children.
The house remains in her name. Nobody sells it, nobody transfers it, and the estate trustee takes no steps to deal with the property.
On June 1, 2026, three years have passed.
Assuming no applicable exception or caution, the house may now automatically vest in her three children.
Here’s what makes this particularly interesting.
The land registry could still show Grandma as the registered owner.
That’s because section 9 operates subject to Ontario’s Land Titles Act and applicable provisions of the Registry Act. The beneficiaries’ legal interests may have changed even though the registered title has not.
Additional registrations or legal steps may be required to reflect the vesting on title.
So just because Grandma’s name is still on title doesn’t necessarily mean her estate trustee can sell the property without involving the beneficiaries.
Who Signs the MLS Listing Agreement and Offer?
This is where real estate agents need to be careful.
Let’s say Grandma’s son is the estate trustee. He has the Certificate of Appointment, and the other children have agreed that the house should be sold.
Can he sign the MLS listing agreement and Agreement of Purchase and Sale?
Maybe. But you need to confirm his authority first.
If the property has already vested in the beneficiaries and the estate trustee does not retain an applicable power of sale, the beneficiaries may need to participate in the transaction.
This could affect:
- Who signs the MLS listing agreement.
- Who is identified as the seller in the Agreement of Purchase and Sale.
- Who signs the Agreement of Purchase and Sale.
- Who signs the transfer and other closing documents.
The important point is that being appointed estate trustee does not automatically answer every question about the authority to sell real estate years after someone has died.
And the last thing anyone wants is to discover three days before closing that the wrong person signed the Agreement of Purchase and Sale.
But Wait. The Three-Year Rule Doesn’t Always Apply!
Before you start calling all of Grandma’s children to sign the MLS listing agreement, there’s an important exception.
The wording of Grandma’s will can change everything.
Section 10 of the Estates Administration Act preserves certain powers granted to estate trustees under a will.
Many professionally drafted wills contain provisions giving estate trustees broad authority to sell real estate and postpone the sale or conversion of estate assets.
Where those powers apply, the estate trustee may retain the authority to sell the property even after three years have passed.
Let’s look at three different situations.
Scenario 1: Grandma’s Will Gives the Estate Trustee Broad Powers
Grandma dies in 2020.
Her will leaves the residue of her estate equally to her three children. It also gives the estate trustee broad powers to sell estate property whenever the trustee considers it appropriate.
Six years later, the estate trustee decides to sell the house.
Can the trustee still sign the listing agreement and Agreement of Purchase and Sale?
Potentially, yes.
This issue was considered in Marcy v. Marcy, 2023 ONSC 5499.
In that case, a beneficiary argued that the property had automatically vested in the beneficiaries because more than three years had passed since the owner’s death.
The court disagreed.
The will gave the estate trustee broad discretionary powers to sell the property and postpone its sale.
The court concluded that section 9 did not override those powers merely because three years had passed.
In fact, the court confirmed that where the will provides the necessary powers, the estate trustee does not lose them simply because the three-year period has expired.
The takeaway: Where a will provides an applicable power of sale and postponement, the estate trustee may still be able to sign the MLS listing agreement and Agreement of Purchase and Sale years after Grandma’s death.
Scenario 2: Grandma Specifically Leaves Her House to Her Daughter
Now imagine Grandma’s will says:
“I give my house at 123 Main Street to my daughter, Susan.”
The house is specifically gifted to Susan and excluded from the estate trustee’s general power of sale.
Grandma dies, and four years pass without the property being transferred.
In this situation, the result may be very different.
In Proudfoot Estate, the court considered a will where a farm was specifically gifted to beneficiaries and excluded from the trustees’ general power of sale.
The court determined that the automatic vesting provisions applied.
Applying that principle to our example, Grandma’s house may have vested in Susan after three years.
The estate trustee cannot simply assume that they can list and sell the house without Susan’s involvement.
The takeaway: If Grandma specifically gifted the house to someone, and the trustee’s power of sale does not extend to that property, the three-year rule could affect who has the authority to sell it.
Scenario 3: Grandma Died Without a Will
What if Grandma never made a will?
When someone dies without a will, this is known as dying intestate.
In that case, there are no powers of sale or postponement granted by a will to preserve under section 10.
The automatic vesting provisions of section 9 generally apply after three years, subject to any registered cautions and other applicable legal requirements.
Even if Grandma’s son has been appointed estate trustee by the court, his authority to sell the property after three years should be reviewed.
The takeaway: If Grandma died more than three years ago without a will, this should raise an immediate red flag for the listing agent.
Before signing anything, get confirmation from the lawyer about who has authority to sell.
Can the Estate Trustee Prevent the Property From Automatically Vesting?
Yes.
Ontario law provides a mechanism to postpone automatic vesting.
Under section 9 of the Estates Administration Act, an estate trustee can register a caution against title using the prescribed Form 1.
A properly registered caution postpones automatic vesting for three years from the date the caution was registered.
For example:
- Grandma dies on January 1, 2024.
- The estate trustee registers a caution against the property on December 1, 2026.
- The caution postpones automatic vesting until December 1, 2029.
The estate trustee can also register further cautions to extend the period for additional three-year terms.
There are also statutory provisions dealing with situations where a caution was not registered before the original three-year period expired. However, the availability and effect of any late registration require legal review.
For real estate agents, the important point is that a title search and review of the estate documentation may help determine whether the property has vested in the beneficiaries.
What Happens If the Wrong Person Signs the Agreement of Purchase and Sale?
Let’s say the estate trustee lists Grandma’s house for $950,000.
The property sells, the buyer provides a deposit, and everyone prepares for closing.
Then the buyer’s lawyer discovers that Grandma died six years ago, the house was specifically gifted to her children, and the estate trustee may no longer have the authority to sell it alone.
Now there’s a problem.
Depending on the circumstances, the lawyer may need to obtain beneficiary consent, arrange additional documentation or signatures, correct title issues, or potentially seek directions from the court.
This could delay closing and create disputes between the estate, beneficiaries, buyer, and seller.
A straightforward estate sale can quickly become complicated.
The solution is simple: confirm the signing authority before the listing agreement or offer is signed.
Five Questions Every Real Estate Agent Should Ask Before Listing Grandma’s House
If the registered owner has passed away, particularly more than three years ago, agents should consider these questions.
- When did Grandma die?
If more than three years have passed, the automatic vesting rule should be considered.
- Did Grandma leave a will?
The wording of the will matters. It may preserve the estate trustee’s authority to sell.
- Was the house specifically gifted to someone?
A property specifically left to a beneficiary can be treated differently from property forming part of the general estate residue.
- Was a caution registered on title?
A valid caution may postpone automatic vesting. The lawyer should confirm whether one exists and its legal effect.
- Has the lawyer confirmed who needs to sign?
The estate trustee may be able to sign alone. Alternatively, the beneficiaries may need to participate in the transaction.
Don’t guess.
Real estate agents are not expected to interpret wills or determine who legally owns the property. That’s the lawyer’s job.
But recognizing a potential issue before the property goes on the market can prevent substantial problems later.
Frequently Asked Questions About Selling Estate Property in Ontario
Can an estate trustee sell a house more than three years after death in Ontario?
Yes, in some circumstances. Section 9 of Ontario’s Estates Administration Act provides for automatic vesting after three years, but section 10 preserves applicable powers granted to an estate trustee under a will.
If the will provides broad powers of sale and postponement, the trustee may retain the authority to sell even after three years have passed.
Who signs an MLS listing agreement when the homeowner is deceased?
Generally, an estate trustee with the necessary legal authority can sign the MLS listing agreement.
However, where the property has vested in beneficiaries or the trustee’s authority is limited, the beneficiaries may need to participate. A lawyer should confirm the proper parties before the listing agreement is signed.
Does property automatically transfer to beneficiaries after three years in Ontario?
Section 9 of the Estates Administration Act provides for automatic vesting after three years where the property has not been dealt with as prescribed by the Act.
However, the rule is subject to exceptions, including applicable powers under a will and registered cautions.
Automatic vesting also does not necessarily mean that the land registry automatically updates ownership.
Can an executor sell a house without the beneficiaries signing?
Yes, where the executor or estate trustee has the legal authority to sell the property.
However, if the property has already vested in beneficiaries and the trustee lacks the necessary authority, beneficiary participation or additional legal steps may be required.
The answer depends on the will, the estate’s circumstances, and the applicable law.
What happens if an estate trustee sells a property without proper authority?
A sale completed without proper authority may face legal challenges from beneficiaries, title issues, or disputes about the validity of the transaction.
The consequences depend on the circumstances, including the estate documents, the nature of the beneficiaries’ interests, and any applicable protections for purchasers.
This is why confirming authority before signing an Agreement of Purchase and Sale is so important.
The Bottom Line
Just because Grandma died more than three years ago doesn’t automatically mean her estate trustee has lost the authority to sell the house.
But it also doesn’t mean the trustee can simply sign the MLS listing agreement and Agreement of Purchase and Sale without further consideration.
Ontario’s Estates Administration Act contains a three-year automatic vesting rule, but the wording of the will, the estate trustee’s powers, and any registered cautions can affect how that rule operates.
For real estate agents, the message is simple: If Grandma died more than three years ago, don’t assume the estate trustee is the right person to sign.
Have the lawyer confirm who has the legal authority to sell before proceeding.
It’s a simple question that could save everyone a significant headache at closing.
How Rabideau Law Can Help
At Rabideau Law, we assist real estate agents, estate trustees, and beneficiaries with real estate transactions involving deceased owners.
Whether Grandma passed away six months ago or six years ago, confirming who has the legal authority to sign an Agreement of Purchase and Sale is an important part of ensuring a smooth transaction.
If you’re dealing with an estate property and are unsure who should sign the MLS listing agreement or offer, contact Rabideau Law before proceeding.
Rabideau Law Professional Corporation
Your Real Estate Law Partner.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The authority to deal with estate property depends on the specific facts, estate documents, and applicable law.
