Possible Predicaments upon a Passing of a Party Prior to Closing

Not all closings go smoothly. There can be a multitude of reasons why a sale gets delayed or canceled, ranging from funding issues, inspection problems, and title issues. Unfortunately, another issue that can arise is the passing of one of the parties to a real estate contract. Aside from dealing with personal loss, family members will have an additional stressor to deal with should a loved one pass away while a real estate contract is pending. Here are a few insights and ideas when confronted with such a tragedy while a home sale is pending.

Is the Contract still valid and enforceable? 

The short answer is, “Yes.” If a party to a real estate contract dies, the contract will likely have language that addresses this. For example, In a FAR/BAR Residential Real Estate Contract, the Standards provision in Section 18, Sub-section O, contains the following language: “This Contract shall be binding on, and inure to the benefit of, the parties and their respective heirs or successors in interest.” What does this mean? It means that because the contract is considered an executory contract, the deceased party’s heirs, beneficiaries, or another person(s) appointed to handle the affairs by a court is bound by the terms of the contract. In other words, the passing away of a party does not void the contract, and the contract is valid and enforceable, and the property can still go to closing.

Who then becomes the parties to the Contract? 

The answer is different depending upon the party who passed. If it is the seller, then the personal representative of the seller’s estate becomes the property party in the interest of the contract. If it is the buyer, then the buyer’s heirs or beneficiaries are the ones who have the right to perform under the contract.

If the seller dies, what needs to be done? 

Suppose the seller is the party who passes away. In that case, a probate matter needs to be open for the deceased party, and the court will have to appoint a personal representative on behalf of the estate of the deceased seller. The personal representative is the only person with legal authority in Florida to act for a deceased party. Depending upon the closing date, a seller’s passing away could delay the closing as the probate process takes some time. Even getting a copy of a death certificate, a requirement to open an estate, may take a few weeks. This delay may allow the buyer to back out of the contract, but an extension can be negotiated between the parties. If the buyer wants to proceed with the purchase, the buyer has the contractual right to do so. The seller’s legal representative cannot back out of the contract as the buyer maintains an equitable right in the deceased seller’s estate as the real property that is the subject of the contract is considered an asset of the decedent. Depending on whether the property was the decedent’s homestead, the personal representative will likely be required to get court approval to execute a “personal representative’s deed” to close on the sale of the property.

If the buyer dies, what needs to be done?

Suppose the buyer passes away before closing, then the buyer’s rights to the contract pass to the buyer’s heirs or beneficiaries. Depending upon the terms of the contract and title commitment requirements, the deceased buyer’s heirs or beneficiaries are most likely the ones who have the right to proceed under the contract. If all the heirs or beneficiaries cannot agree on how to proceed with the seller, the buyer’s deposit may be forfeited, and the contract canceled. What would be unlikely in such a scenario is a court order of “specific performance” by the buyer’s heirs or beneficiaries forcing them to buy the property, a remedy usually available to a party against a party who breaches a contract.

These are just a few things to consider when a party to a Florida real estate contract passes away. Of course, while a contract is pending, the untimely passing of a party is unfortunate. Still, with a bit of sympathy, compassion, and the knowledge of dealing with such a tragedy, you can reduce the time, costs, and stress and ultimately close. Should this issue arise or if you have any questions about what to do if a party to a Florida real estate contract passes away while the contract is pending, always contact a qualified real estate and probate attorney for a consultation.

Sincerely, Mark C. Mann, Esq. mcmann@berlinpatten.com

Mark focuses his practice on civil litigation including real estate disputes, contested probate matters, family law cases, and personal injury/wrongful death cases.


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