Contracts and Death

Generally, when a person dies their Legal Personal Representative will be bound by any contracts that the deceased person had entered.

When entering a contract for the sale of land consider this. If you are purchasing a property and the owner dies do you want the contract to continue? If most cases a buyer would still want the property. But a problem will arise where it can take around 3 to 6 months to get probate through.

Without a grant of probate nobody will have authority to sign a contract – which may not matter if the deceased had already entered it. But nobody will have authority to sign a transfer of land document. This could mean even though you have a valid contract you may not be able to settle on the purchase.

Now consider the other side you are the buyer and you die. Do you want your estate to go through with the purchase? If most cases the answer would be no as there will be difficulties on the side of the purchaser too – if loan documents not signed the estate will need to apply for a loan and this could only be done after probate.

Without being able to complete a purchase would lose their 10% deposit, and possibly more. The seller could sue the estate potentially.

Therefore, seek legal advice on whether to have a clause in your contract allowing either party to terminate the contract if either party dies.

Written by Terry Waugh, lawyer at Structuring Lawyers, www.structuringlawyers.com.au

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