What Happens If A Vendor Dies Before Settlement?


The consequences of a vendor dying after a sale and purchase agreement has been signed, but before the settlement date depends on how the property was held. Settlement cannot be completed if the property is still held in the name of a deceased vendor/owner.

Property held as joint tenants
If the property is held as joint tenants with another property owner (a common occurrence where the property is held by a husband and wife) then the process is relatively straightforward. In that situation, the surviving vendor can use the death certificate for the deceased vendor to transmit the property into the surviving vendor’s name. This can usually be achieved in a relatively short time frame, and the timing of settlement may not be delayed.

Sole Vendors and Property held as tenants in common
If a sole vendor, or a vendor that owns a share in a property, dies before signing any transfer documentation, the executors must obtain Probate of the deceased’s last will before the property can be transmitted to the executors of the estate. Unfortunately this process can take a few weeks. If the deceased vendor did not have a valid will, then letters of administration will have to be granted before the property can be transmitted to the administrators. This is a much longer process and will definitely delay settlement.

Options to deal with the delay - Occupation Licences
One way to keep all parties happy is for the executors of the estate and the purchaser to enter into an occupation licence which will enable the purchaser to occupy the property as a licensee until Probate is granted by the High Court. This may not work for every situation and therefore each party should seek legal advice before entering into the occupation licence.

Financial consequences of delay
If the settlement date passes without settlement occurring the purchaser can issue a 12 working day notice to settle. If this date also passes without settlement occurring, the purchaser can sue the vendor’s estate for specific performance, or cancel the agreement and pursue the vendor’s estate to recover any losses suffered.

What about incapacitated vendors?
Another point to note is that if you know your vendor client is ailing or ill ensure that they have an enduring power of attorney in relation to property in place, so that any documentation can be signed under power of attorney if your vendor is incapacitated and cannot sign transfer documentation themselves.

For further advice on issues with a vendor’s ability to sign sale documentation, contact Registered Legal Executive, Jennifer Edwards by email at Jennifer.edwards@smithpartners.co.nz or phone 09 837 6889.








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