Written by Roy Bregman,
an admitted attorney with over 51 years of experience in deceased estates.
A client asked: "A person signed an Offer to
Purchase (OTP) to sell their property and instructed lawyers to proceed with
the transfer. However, they passed away before the transfer was registered. How
can one ensure that the executor of the deceased's estate complies with the
signed agreement and completes the transaction?"
Understanding Property Sales When a Seller Dies: A Legal
Guide
Key
Takeaways
· A Contract is Still a Contract: A valid Offer to Purchase (OTP) does not become void if the seller passes away. The agreement remains legally binding on the seller's estate.
· The Executor Must Act: The executor, appointed by the Master of the High Court to manage the deceased's estate, "steps into the shoes" of the seller and is obligated to honour the OTP and proceed with the property transfer.
· Expect Delays: The transfer process will likely take longer than a standard transaction. The executor must first be formally appointed and then settle all estate debts before the property can be transferred to the buyer's name.
·
Buyers Have Rights: If the executor unreasonably
delays or refuses to comply with the sale agreement, the buyer has the right to
take legal action to compel them to fulfil the contract's terms.
Introduction to the Legal Principles
When a person signs an Offer to Purchase (OTP) to sell their
property, they create a legally binding agreement. A common concern arises when
the seller passes away after the OTP is signed but before the property transfer
is registered at the Deeds Office. The central legal principle governing this
scenario is that the death of a party does not automatically invalidate a valid
contract. The rights and obligations established in the OTP are passed on to
the deceased's estate. The estate, represented by a legally appointed executor,
"steps into the shoes" of the deceased seller and is bound to honour
the terms of the sale agreement.
This ensures that a buyer's rights are protected and that
the deceased's contractual undertakings are fulfilled, provided the OTP was
validly concluded. The process, however, is subject to the administration of
the deceased estate, which introduces specific procedures and potential delays.
The
Legal Framework: Roles and Procedures
The Executor's Central Role
Upon the seller's death, their estate must be reported to
the Master of the High Court. The Master then appoints an executor by issuing
Letters of Executorship (the official document giving the executor power to
act). This executor is the only person with the legal authority to act on
behalf of the estate, including managing its assets and liabilities. Case law
confirms that the court recognizes only the executor, not heirs, as the
representative of the estate. The executor's primary duty is to administer the
estate according to law, which includes honouring valid contracts entered into
by the deceased.
Steps to Finalise the Transfer
- Appointment
and Authority: The first step is the formal appointment of the
executor. Without Letters of Executorship, no one can legally sign
transfer documents on behalf of the deceased's estate.
- Honouring
the OTP: The executor is obliged to proceed with the sale as
outlined in the OTP. They will sign the necessary transfer documents in
their capacity as the estate's representative.
- Estate
Administration: Before the property can be transferred, the
executor must settle all the estate's debts relating to the property. This
includes obtaining clearance certificates from the local municipality for
rates and taxes and ensuring all other liabilities are paid.
- Conveyancing
Process: The transfer documents must be prepared by a
conveyancer, as required by the Deeds Registries Act. The conveyancer will
work with the executor to lodge the documents at the Deeds Office for
registration in the buyer's name.
What
if the Executor Refuses to Comply?
If an executor unreasonably delays or refuses to honour a
valid OTP, the buyer has legal recourse. The buyer can apply to the court for
an order compelling the executor to perform the contractual obligations. Such
action is typically a last resort when disputes or unwarranted delays hinder
the process.
Conclusion
The death of a property seller after signing an OTP does not
terminate the sale. The contract remains valid and enforceable against the
deceased's estate. The appointed executor is legally bound to take the
necessary steps to finalise the transfer, which includes signing documents and
settling estate debts. While the process may experience delays due to the
formalities of estate administration, the buyer's right to take ownership of
the property is secure. Clear communication between the buyer, the executor,
and the conveyancer is essential to navigate the process smoothly and ensure
the deceased's final wishes, as captured in the sale agreement, are respected.
