What happens to a Sale Agreement if someone dies?

Private Property South Africa
Press

Buying or selling property can become complicated if the buyer or seller dies during the transaction. Here's what happens when that occurs.

Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient. Just because you enter into a contract to either buy or sell does not mean the deal will go through. “We are fortunate enough to have the expertise & knowledge within our group to assist in shedding some light on what would happen in the event of such a case” says Craig Hutchison, CEO of Engel & Völkers Southern Africa.

Karien Hunter, a practising attorney from Engel & Völkers KZN Dolphin Coast have given us her expert guidance:

The sale agreement remains valid

Agreements concluded prior to the death of either party to a sale agreement in circumstances where transfer has not as yet taken place, remain valid and enforceable.

The death of a party would however cause inevitable delays and in some instances it would no longer be practically possible to proceed with transfer, for example where a purchaser had bought a property with mortgage finance from a bank as the bank would probably withdraw the bond as there would no longer be an income to support the payment of the bond.

However, on a cash transaction, the estate would be obliged to proceed with transfer and pay the purchase price, alternatively, come to an agreement with the Seller for the consensual cancellation of the sale.

Delays with the transfer of the property

In the event of the death of a seller, the Power of Attorney signed by the seller in favour of the conveyancers to effect transfer falls away and the conveyancers now require the signature of the executor to such Power of Attorney to proceed with transfer. This applies even where documents have already been lodged at the Deeds Office and documents would have to be withdrawn from the Deeds Office in these circumstances. The Power of Attorney must be also endorsed by the Master of the High Court which can cause further delays.

The Master’s office will only endorse the Power of Attorney once it has satisfied itself that all its requirements have been met and that there is no impediment to the transfer of the property – for example, where an estate is insolvent.

What happens upon the sale of a property by an Executor after death?

• An Executor can only sell and transfer a property with the consent of the heirs to the estate, unless the property is sold to meet the debts of the estate.
• The Master’s office will likewise have to endorse the Power of Attorney to transfer the property which will be submitted to the Deeds Office.
• The Master’s office will only do so once it is satisfied that the heirs have consented to the sale of the property and provided that the proposed transfer is in accordance with the liquidation and distribution account which has lain for inspection, with no objection.

With reference to the above it is clear that care should be taken upon the sale and transfer of a property where a deceased estate is involved, and that parties to a sale agreement are advised of the inevitable delays in complying with the provisions of the Administration of Estates Act and the Deeds Registry Act.

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