Can the executor of a will enter into an option agreement for property on behalf of the estate?

Question

I am acting as executor for my late father's estate. This is in UK.

One issue that the beneficiaries do not 100% agree on is how to go about selling the house. Some wish to sell it "normally" via an estate agent, others wish to explore possibility of selling to a developer with planning permission, as this potentially gains more cash, but at a risk. Some beneficiaries (including myself) do not want to take on this extra risk. However, I would like to take all beneficiaries' opinions into account, so I want to explore what the developer option would mean.

My understanding is that a sale via an estate agent would be done in a very similar way to selling one's own house, and can be handled by conveyance direct from the estate. That is, there is no requirement to resolve the inheritance of the house as a shared asset by all beneficiaries before selling it. Instead it is sold by the estate, ownership transfers to the new owner, and the executor would then distribute the proceeds of the sale to the beneficiaries.

There are lots of ways to deal with property development. For the purposes of this question, assume it will work via a call option. The developer would create an option agreement against the property, to purchase it at an agreed price in future, should the planning process and potential profits suit them. Of course if we proceed with that we will take professional advice on the option agreement in detail.

My question is whether it is feasible for the estate to enter into an option agreement directly with the developer? If it is feasible, is it advisable?

My initial thoughts are that it would either not be possible (although this is just an assumption - without any legal knowledge), or potentially just a bad idea, because the option agreement would be more complex, due to ownership and accountability being split.

Therefore, my initial understanding is that the house would need to transfer ownership to being shared between beneficiaries, and as a group the beneficiaries could enter into option agreement (or not) as normal property owners. One attractive approach here is to have beneficiaries who want low risk be bought out by the others, allowing us to resolve differences of opinion on selling the house separate to resolving the will. However, I am not asking about that detail - I'm just sharing it to avoid answers focusing on that advice. So another way to phrase my question: Is this inherit-then-contract approach the only [legally sensible] way to approach signing up to an option agreement, making it fundamentally different to an estate agent sale?

Answer 1

An executor can do anything with the property that the previous owner could subject to following the instructions in the will.

However, the executor mast act in the best interest of the beneficiaries - not in accordance with their requests. Engaging in property development, even simple property development like obtaining planning permission, would be unusual for an executor and, if it goes wrong, the executor can be sued by the beneficiaries who suffered damage.

Selling an option is a terrible idea for an executor: an option transfers risk to the seller of the option from the buyer. If the market rises, you lose the gain, if the market falls, the buyer walks away and you have to deal with the house in a falling market. The seller doesn’t win, that’s why they get paid.