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In the majority of cases, there is a period of time between the signing of the contract governing a real estate transaction and the actual real estate closing. What happens if, during this period, one of the parties involved in the transaction passes away?
Surprisingly, the answer will depend on who dies. Dying does not extinguish the obligation to perform a real estate contract if the deceased is the seller. However, if the buyer dies, the seller may not be able to enforce the real estate contract against the buyer’s estate. It is, however, possible for the seller to file a claim for lost profits against the estate, which unfortunately could cause the seller to run into several problems when trying to force the estate to complete the purchase.
For starters, it may be impossible. If the buyer had borrowed the money to pay for the property, the estate is very much unlikely to have a similar borrowing power.
Additionally, Florida probate law has a detailed list of priorities when it comes to how estate funds should be paid, and a frustrated real estate seller is far down that list. The money the buyer was planning to use to buy the property may be needed for the administration of the estate, the final medical expenses, the funeral bills, or a family allowance to a spouse or a child, all of which will generally come ahead of the class of creditors involved in a real estate closing with the decedent when he or she was alive.
While Florida law tries to treat people equally in as many respects as possible, enforcing a sales contract when a party involved in the transaction dies is not one of them.
What Happens if a Buyer Dies Before the Real Estate Closing Date?
When the buyer in a real estate transaction dies after the sales contract has been signed but before the title has been actually transferred, the buyer’s interest in that real estate will be considered to be an “estate of inheritance.” The rights to the contract will pass to the buyer’s beneficiaries or heirs and not to the buyer’s estate. The decedent buyer’s personal representative should not be involved in making the decisions regarding the real estate transaction. In these circumstances, the heirs or beneficiaries will decide how to proceed with the real estate closing.
What happens if a Seller Dies Before the Real Estate Closing Date?
If the seller dies, it may be possible for the buyer to argue that the delay of the real estate closing date in question is a reason to terminate the transaction. A buyer that decides to exit the contract when the seller dies might use this unfortunate circumstance to do so legally. This is because most sales contracts have deadlines that must be strictly adhered to by the parties involved.
A buyer would want to do this if, for instance, the seller passes away in the home that is being sold, which might cause the buyer to have some personal doubts about moving into a property in which someone recently died.
On the other hand, if the buyer wants to continue with the real estate closing, he or she is free to do so. There is nothing a buyer is required to do to make sure the sales contract is valid or to continue with the transaction.
Will the Florida Probate Process Delay the Real Estate Closing?
When it comes to probate, there can be some complications.
A personal representative may not have the legal authority to act on behalf of a decedent’s estate until the Florida probate process is completed. Undoubtedly, this can force the original real estate closing date to be drastically delayed.
Unexpected Death before a Real Estate Closing? Farshchian Law, P.A. Can Help
The experienced real estate and probate attorneys at Farshchian Law, P.A. know how to deal with the unexpected death of either the buyer or the seller before a Florida real estate closing. Our team of experts in Florida probate law knows the specific steps that need to be followed in order to properly handle this type of situation and many more.