If you find yourself in a situation where the Seller has died after signing the Contract of Sale but prior to Settlement, it can place a lot of uncertainty for all parties about what is going to happen, and how this impacts the property transaction.
It's important to remember that there are clear steps to take and considerations to bear in mind as you move forward. Engaging an experienced lawyer can take a large burden off your shoulders during this time, and ensure that your rights and obligations are being protected and met.
Here's your guide on how to navigate this situation smoothly.
Determine The Ownership Type
Your first step is to determine whether the property is owned as Joint Tenants or Tenants in Common.
How can you establish this? The tenancy type is specified on the Title Search. But what difference does this make?
When multiple individuals co-own a property in Queensland, they can choose between Joint Tenancy and Tenancy in Common. This decision is made during a property purchase, guided by the buyers' instructions to their lawyer or conveyancer.
In Joint Tenancy, all owners (even more than two) hold equal shares of the property. If one owner passes away, their share automatically transfers to the surviving owner/s. This is known as a right of survivorship. This is commonly seen with spouses, allowing the surviving partner to inherit the property seamlessly.
Tenants in Common
In Tenants in Common, each owner possesses a specific share. If an owner dies, their share is inherited by their designated beneficiaries as stated in a Will or other legal document. This ownership type is typical among siblings, friends, business partners, or those with complex family structures.
How to Prepare a Contract of Sale Involving a Deceased Party
For Joint Tenants
If one of the owners has died before the contract of Sale is signed, only the survivor/s should be listed as the Seller. A deceased's Will, beneficiaries, and executors are not applicable as noted earlier.
A Request to Record Death will also be required, and involves lodging the Death Certificate and requisite form at Titles Queensland to remove the deceased from the Title. This must be done prior to Settlement, and we would recommend including a special condition to safeguard the Seller.
We always recommend seeking professional assistance from a lawyer at this stage to ensure documents are completed correctly and submitted to the relevant authorities in the correct manner.
For Tenants in Common
This will also apply if the only owner has died.
Ensuring that the correct individual and/or entities are listed on the contract is important, as you may otherwise expose the parties to financial or legal consequences.
If an owner has died before a contract has been signed, replace the deceased's details on the Contract of Sale with:"(Executor's Full Legal Name)" as Personal Representative of the Estate of "(Deceased's Name)".
If you are unsure who the appointed executor is, we always recommend speaking with the lawyer handling the estate administration.
A Transmission Application will also need to be prepared and submitted, and will appoint a personal representative for the deceased. This step must be completed before settlement, as it provides a legal right for the personal representative to sell the property. Please note, however, that transmission applications can take a substantial amount of time to be processed, and we would always recommend special conditions be inserted to protect the parties.
Deceased individuals cannot execute documents, so avoid including them on a Property Occupations Form 6 or Contract of Sale.
We have also seen a Power of Attorney sign the Contract of Sale on behalf of the deceased, but this is not appropriate. A Power of Attorney ceases upon the Principal's death, rendering it legally invalid.
Given the complexity of transmission applications, a longer settlement period is advisable to accommodate the processing time.
Standard residential REIQ contracts do not give any specific rights in the event of the death of a party prior to settlement. We'll discuss this in more detail in a later publication, but if you hold concerns about a Buyer or Seller and their health during the transaction, you may want to consider further special conditions.
Navigating property ownership intricacies involving deceased parties is complex. It is always recommended to engage experienced estate lawyers who can guide you through the transaction. Our team includes estate lawyers and conveyancers, and we can assist with both estate administration and property transactions, keeping both informed throughout the course of both matters. Don't hesitate to contact us to discuss your matter further, or schedule an appointment today.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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