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Property: Deadly consequences

Every Issue

Cite as: (2007) 81(3) LIJ, p. 82


Death can have an impact on a conveyancing transaction in a number of ways.

Care needs to be taken when selling a property owned by a person who has recently died; in determining who is entitled to sell if a co-owner dies; and in responding to a death during the course of a contract.

Death before contract

The fact that a registered proprietor has died does not necessarily mean that a proposed sale has to go on hold.

There may be good reasons why an asset should be disposed of promptly after the death of the owner, but equally good reasons why the estate of the deceased may take some considerable time to be finalised.

A sale in such circumstances need not await all of the formalities of a grant of probate as an executor of a will is entitled to enter into a contract to sell an asset of the estate, even though the executor has not obtained a grant of probate at the time the contract is entered into.

The sale is made subject to the executor obtaining a grant of probate and the proposed settlement date takes that condition into account – for instance, by specifying settlement “on 1 June or 14 days after the vendor obtains probate”.

However, an executor in such circumstances cannot enter into a terms contract as the executor is not “presently entitled to become the registered proprietor” as required by s3 of the Sale of Land Act 1962 (Vic).

This ability to intermeddle with estate assets is only available to an executor named in the will and is not available to a person who may intend to apply for a grant of letters of administration of a deceased estate as such an appointment is very much within the discretion of the Court.

Sensational deaths

That someone died in a house that is now for sale is a reasonably common event.

To date such circumstances have not caused the common law any concern and fall within the ambit of caveat emptor – let the buyer beware – and the vendor in such circumstances has no duty to bring the death to the attention of a prospective purchaser.

However, while a natural death may not attract the attention of the common law’s view, it may be different in the cases of violent death.

In such cases modern statutory principles of misleading and deceptive conduct may impose additional vendor disclosure obligations.

A case involving such circumstances came before the New South Wales Administrative Decisions Tribunal late last year[1] in the context of disciplinary proceedings against an agent involved in such a sale.

While the comments do not directly bear on the vendor’s obligations, it is noted that the vendor did agree to release the purchaser from the contract when the purchaser became aware of the circumstances of the death after entering into the contract.

A vendor proposing to sell such a property might consider including a special condition in the contract to the effect that the purchaser is aware that the former owner died while residing in the property and that the death occurred in unusual circumstances.

Survivorship

A common area of disputation is where one joint tenant dies after the parties have separated. Who will be entitled to ownership and have the ability to sell will depend on whether the doctrine of survivorship applies.

The survivor claims the whole of the property by survivorship, but the beneficiaries of the deceased argue that the separation of the parties severed the joint tenancy, and that survivorship does not apply.

It is impossible to provide a categorical formula for resolving such disputes as each case will very much depend on the length and circumstances of the separation.

Such disputes often arise in the context of a family law dispute and resolution may depend on a myriad of factors arising out of the relationship between the co-owners.

Death during the course of the contract

If a vendor dies during the course of the contract the vendor’s lawyer should advise all parties concerned of the death and take steps to establish the ability of the legal personal representative (either executor or administrator) to complete the transaction.[2]

This may require a “temporary” grant (ad colligenda bona) if settlement is imminent.

While the easy solution would appear to be to rely on existing documents (particularly if the transfer of land has been signed by the deceased in anticipation of settlement) such action is fraught with danger.

The same may be said of relying on a transfer signed by an attorney under power when the donor/vendor has died.

Settlements conducted in such circumstances are liable to be challenged by estranged family members or any other unexpected potential beneficiary of the deceased’s estate who find that the main asset of the estate has been disposed of and distributed on the basis of a transfer which took place after the death of the deceased.

Conveyancing certainly throws up its challenges, especially when death is involved.


RUSSELL COCKS is the author of 1001 Conveyancing Answers.


[1] Hinton v Commissioner for Fair Trading [2006] NSWADT 257 & 299.

[2] (1989) Law Institute Journal 1149 (December).

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