What happens if Buyer or Seller die before closing? Can you force the sale? Do you still have a valid contract?
You are excited about the purchase or sale of your house, everything goes well until you receive a call that you were not expecting where they inform you that one of the parties to the contract, buyer or seller, died and you will not be able to complete the transition.
Although not very common,
these types of situations leave buyers and sellers wondering what will happen
to the transaction. Can you force the sale of the house? Do you still have a
valid contract? What are your options if one of the parties dies before
completing the sale? Does the purchase contract contemplate these types of
scenarios?
The good news is that
yes, most residential purchase contracts have clauses that describe these types
of situations. For example, the “As-Is FAR BAR residential purchase contract” states
the following:
“This Contract shall be
binding on, and inure to the benefit of, the parties and their respective heirs
or successors in interest. Whenever the context permits, singular shall include
plural and one gender shall include all. Notice and delivery given by or to the
attorney or broker (including such broker's real estate licensee) representing
any party shall be as effective as if given by or to that party. All notices
must be in writing…”
In other words, if a
party to the contract dies, then the contract remains valid.
I the Seller dies, the
personal representative of the seller’s estate must deal with the contractual
responsibilities created under the sales agreement; the contract will be
considered an obligation of the decedent’s estate. Buyer must understand there
will be delays associated with the estate, so he must decide whether he wants
to wait until closing can take place or cancel the contract and move on to
another property.
If it is the buyer that
has passed away after the sales contract has been signed, but before the title
has been transferred then things are different. The buyer’s interest in that
real estate is an “estate of inheritance.” The rights to the contract pass to
the buyer’s heirs or beneficiaries and not into the buyer’s estate.
Here, the Buyer’s heirs
or beneficiaries must decide how to proceed. They can gather the cash and
complete the transaction. If they choose not to do so, then the deposit made by
the deceased buyer may be in jeopardy.
Don’t risk buying or
selling a property on your own. Hire the services of an expert who will protect
your rights under the contract.
Call me to discuss
your needs and expectations. I will be glad to schedule an appointment or video
call to answer all your questions.
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