What Happens If A Party To A Real Estate Contract Dies?

There is a chunk of time between signing a real estate contract and the actual close of escrow. During this period, the death of a buyer or seller can complicate the process.

Take a look at how the death of one of the involved parties can affect a real estate transaction:

What Happens If the Buyer Dies Before Closing?

If a buyer dies before signing the sales contract, the property purchase cannot be completed. In this case, the seller retains ownership of the real estate.

But if the buyer dies after signing the sales contract but before the transfer of property title, the beneficiaries of the buyer's estate have a right to the contract. They could reinstate the contract and complete any pending payments. The seller may complete the purchase by transferring the title to the buyer's beneficiaries.

Keep in mind that some insurance companies offer sellers a protection policy. With this cover, the insurer can purchase the property from the seller if the buyer dies.

If you have any questions, be sure to consult with an experienced real estate attorney. A lawyer can help you avoid unnecessary legal battles that may cost time and money.

What Happens If the Seller Dies Before Closing?

There are several possible outcomes if the seller dies before the close of escrow. For instance, if the property has joint ownership, the surviving owner has a right to sell. That means, if the seller was married, the spouse could sign all the closing documents and proceed with the sale.

But if the seller solely owned the property, you may need to enquire whether they had a will. If so, the seller probably listed an executor to handle the property sale. In this case, the seller's death does not automatically invalidate the contract. An executor of their estate could sell the property through a private sale or listing a real estate agent.

If there is no will, the courts can appoint a personal representative to oversee the sale. Since it may take a while to appoint a personal representative, the property sale could take some time. So, you'll need to be patient and allow the legal process to take its course.

Closing a property sale after the death of a seller can be complicated. You need to have the proper paperwork and follow all state laws. If you are unsure about how to proceed, contact a licensed real estate attorney.