The GAR Contract provides that the contract shall be for the benefit of and binding upon the parties and their heirs, successors, legal representatives, and assigns. Dying does not extinguish the obligation to perform a real estate contract.
In most cases, if it is the seller who passes away, the contract signed is still valid. While the deceased seller cannot sign the closing documents, their estate is responsible for the seller’s obligations and the buyer has the right to take ownership of the property at closing, according to the terms of the contract.
Property rights must be determined before the contract can be fulfilled, and upon death, the estate of the deceased must be administered. If a probate process is necessary, the closing could be delayed, especially if it involves tracking down heirs and giving notice. If the buyer is not willing to wait for the probate to finish, which could take weeks or even months, the contract can, in most cases, be terminated and the earnest money will be returned to the buyer.
If it is the buyer who dies before closing, the contract they signed is also binding. The buyer’s estate is responsible for contractual duties entered into before their death. Many contracts state that the seller’s only remedy is to keep the earnest money deposit so the seller may not be able to easily enforce the contract against the buyer’s estate. Although it is possible for the seller to file a claim against the buyer’s estate for lost profits, it is rare that a seller is successful in winning a case against the buyer’s estate.
Every situation is different so it is recommended that the parties consult with their attorney so they know the best course of action and how they should proceed.
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