Death of a Party to a Contract – What to Do

A problem arises when a buyer or seller dies before the contract can be completed, as the deceased party can no longer perform their obligations under the contract. Does this mean that if a party dies or was dead before entering into the contract that the contract will be automatically terminated? The other question it raises is whether it is possible to sell the property if the seller is dead? The short answer is the contract can still go ahead and here is why.

Terms of the contract

A standard Real Estate Institute of Queensland (REIQ) contract (the most commonly used contract template) defines a party to include the deceased party’s executors, administrators, successors or permitted assignors (that is anyone the seller has agreed to act on the deceased’s behalf for the contract). Theoretically, the death of a party does not immediately terminate the contract.

In practice, there can be a number of issues if a party to the contract dies before settlement is completed. The main issue being that although a party to the Contract may die, the key dates and time limits to complete obligations under the contract remain. For example, if a buyer dies before the contract settles and they were obtaining a loan to pay for the purchase, the bank may no longer provide the loan as the death of the buyer changes the loan conditions.

What this means is that if either party dies before the contract is settled, they should immediately advise the other side of the party’s death. It may require an extension of a condition that is due to allow the contract to proceed, and notification of death may be required to a relevant authority before proceeding with settling the contract.

Seller’s death

Whether the seller died before entering into the contract, or died during the contract, steps must be taken to notify the Department of Natural Resources (known as the Titles Office) of the seller’s death. The seller’s death must be recorded on the title before the property is sold, and the title will be transferred to reflect who will be acting on the deceased’s behalf to sell the property. Without the title reflecting who is acting on behalf of the deceased seller, the buyer cannot be forced to settle the contract.

The death of a landowner can be recorded on the title based off three options, whether:

• a grant of probate (for a will) or letters of administration (no will) has been issued by the Court;
• the deceased had a will, and the executors have not applied to the court for grant of probate; or
• the deceased did not have a will.

The person who is acting on administering the deceased’s estate will apply to the Titles Office to record the death of the seller. This person is an executor of a will or if no will, the priority of persons eligible to apply for letters of administration (see regulation 610 of the Uniform Civil Procedure Rules 1999 (Cth)). Whoever is applying to the Titles Office to act on the deceased’s behalf to sell the property will be listed on the title as “personal representative”.

Documentation to record seller’s death

Each of the three above options have their own forms to complete with the Titles Office and different documentation to lodge.

If there is a grant of probate or letters of administration for the deceased, the seller’s representative will attach a certified copy of that document with the Titles form. This is the only document required to be lodged with the Titles form as a grant of probate or letters of administration are issued by the Supreme Court, and in the process are checking the validity of the will and who is applying to administer the seller’s estate where there is no will.

There are circumstances where the deceased has left a will but the executors have not applied for a grant of probate. This may be because there is urgency in selling the property of the assets of the estate are not high enough that the executors believe a grant of probate is required. In the circumstances a will was made but a grant of probate has not issued, the executors can lodge to complete the relevant Titles form (while the will includes a declaration to be completed by the deceased’s representative) and attach the original will of the deceased signed and a certified copy of the deceased’s death certificate. If choosing this option, the deceased’s representative should take great care of the original will and ensure the will has not been torn, marked or stapled to any other documents as this may affect the validity of the will.

If there is no will and letters of administration has not been issued by the court, a person prescribed under regulation 610 of the Uniform Civil Procedure Rules 1999 (Cth)may complete the relevant Titles form and declaration.

Conclusion

If a landowner dies, their representative should advise the Titles Office of the deceased’s death and attend to transferring the property into their names as personal representatives of the seller. This will then allow the representatives to act on the deceased’s behalf to sell any property the deceased owned.

If a party to a contract dies before the contract settles, the deceased’s representative should notify the other party immediately as the contract is still in effect, and the key dates in the contract still remain.

If you have any questions or require assistance with your estate planning or conveyancing matters in Queensland, please contact the property team at NB Property Law for more information.

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