What happens if a party to a contract for sale of property dies before completion?

If a party to a contract for the sale of property dies during the period after exchange and prior to completion, the contract remains enforceable subject to any special conditions dealing with the death of a party. If the Vendor dies, the ownership of the property will determine how the property will be transferred to a person with authority to complete the contract should the Purchaser wish to proceed to completion.

It is common for a special condition to be inserted into the contract to allow for either party to rescind the contract should the other party die prior to completion of the contract. Upon the death of a party, the other party should be promptly notified of the death for that party to consider whether the contract is to continue.

In the circumstances where the Vendor dies prior to completion, the ownership of the property will determine who is legally authorised to perform the contract. The title search annexed to the contract will disclose the registered proprietor(s) of the property and if more than one registered proprietor, it will note the ownership as joint tenants or tenants in common.

Joint Tenants

Where the registered proprietors are joint tenants, the right of survivorship automatically transfers ownership from the deceased joint tenant to the surviving joint tenant. Practically, this requires a Notice of Death to be lodged with NSW Land Registry Services for the transfer of ownership. Details of the evidence of death will need to be provided and this is commonly found on the death certificate. A death certificate may be issued a few weeks after death.

Tenants in Common or Sole Owner

Where the registered proprietors are tenants in common or there is only one registered proprietor on the title, the deceased’s share of the property will be dealt with as an asset of the deceased estate in accordance with the terms of his or her Will. The Executor(s) named in the Will of the deceased owner will need to make an application for Probate in the Supreme Court of NSW. Probate is required to lodge a Transmission Application with NSW Land Registry Services for the deceased’s share in the property to be transmitted to the Executors of the Estate in order for completion of the sale.

If the deceased owner died intestate (meaning without a Will), an application will need to be made for Letters of Administration in the Supreme Court of NSW by an eligible person pursuant to the Succession Act 2006 NSW. This is commonly the spouse of the deceased owner.

Purchasers should be aware that it may take months to prepare for the application for Probate or Letters of Administration and the issuance of the grant by the Supreme Court of NSW when dealing with a deceased Vendor. This may affect loan approvals and payment of stamp duty time frames.

Purchasers need to be aware of this right to rescind upon the death of the Vendor particularly on contracts with a long settlement period or option agreements. Development applications and planning items may all be lost if the Vendor’s successor decides to rescind the contract and then sell at a higher price.

If you have any will or deceased estate queries, contact our team at (02) 9307 8900 or at [email protected].

The blog published by Rostron Carlyle Rojas Lawyers is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the author. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation.

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