What Happens When a Buyer or Seller Dies Before Closing?

When we think of things that could go sour when we are getting close to a real estate closing, we don’t think of death as being a possibility. But it can and does happen, that a buyer or a seller passes away, while property is under contract, but before the closing.

Most real estate contracts bind not just the buyer and seller, but also their heirs and estates. So the death of either, doesn’t automatically terminate the real estate contract. But there are some realities that may make closing impossible or impractical.

When the Buyer Dies

If the buyer is the party who passes away, the chances of completing the sale diminish significantly.

One reason is the loan contingency, which allows the buyer to back out of the agreement if the buyer can’t get financing. If the buyer dies, the buyer’s estate likely cannot get financing to complete the purchase the way the buyer can or did (or can’t get financing quickly enough to close), and thus, the contract would be unenforceable, just on that basis.

Even if the buyer has money in his or her estate to purchase the home cash, the closing likely still wouldn’t happen, because there are priorities in probate law, and a seller looking to complete a closing, is not given much priority to get ahold of a deceased buyer’s money. As a seller, you are just a creditor, which rarely gets much from the average estate.

This isn’t to say that closing is impossible. If the estate of the buyer, through the personal representative, still wants to complete the transaction, and the parties are willing to extend the time, and perhaps wait for probate court to enter the necessary orders, the closing may still be able to happen.

When a Seller Dies

If a seller dies, and the buyer wants to back out, as the buyer may want because of the delays that the death of the seller may cause, it is possible to cancel the contract, because most of the contractual deadlines won’t be able to be met once the seller passes away.

If the seller, through his or her estate or personal representative, wishes to continue the transaction, they can do so.

There can be issues when property that is being sold was co-owned by a married couple, and one spouse in that couple passes away. That’s because of how the property is titled.

If the property is titled as joint tenants with right of survivorship, the property would pass to the surviving spouse, and so long as he or she was on the original real estate contract, there shouldn’t be an issue with him or her completing the sale.

But if the property was solely in the name of the spouse who passed away, or else, titled as tenants in common, things get more difficult. The surviving spouse would not own the property outright, and the buyer would be left to either walk away from the agreement, or wait for the probate court to work out what happens to the deceased spouse’s interest in the property.

We can help you with problems that may come up during your real estate closing. Call the West Palm Beach real estate lawyers at The Law Offices of Larry E. Bray today for help buying or selling property.

Sources:

cornerstonetitleco.com/blog/title-track/2023/07/18/what-happens-when-a-death-occurs-before-title-closes

rmaaresources.com/broker-corner/what-if-the-buyer-or-seller-dies-before-closing