KEY TAKEAWAYS: In NSW, the death of a buyer or seller after contracts have exchanged does not usually terminate the property contract, as exchange creates a legally binding agreement. The deceased party’s estate, through an executor or administrator, will often assume responsibility for completing the property transaction. Settlement may be delayed while probate, letters of administration, lender approvals and other legal requirements are addressed. Early legal advice is crucial to navigate conveyancing, estate administration and ownership issues, particularly where finance arrangements or multiple parties are involved. What Happens of a Buyer or Seller Dies After Exchange But Before Settlement in NSW? In most cases, a NSW property contract remains legally binding if a buyer or seller dies after exchange but before settlement. The deceased person’s estate will typically step in to complete the transaction, although delays may occur while estate administration matters are resolved. What Happens if a party to a NSW Property Contract Dies After Exchange but Before Settlement Buying or selling property is often one of life’s biggest transactions. While most conveyancing matters proceed smoothly from exchange to settlement, unexpected events can occur. One question that occasionally arises is: what happens if a buyer or seller dies after contracts have exchanged but before settlement takes place? The answer will depend on the circumstances and terms and conditions of the specific Contract, but in most cases the contract does not automatically come to an end. Exchange Creates a Binding Contract Once contracts have been exchanged in NSW, a legally binding agreement is created between the buyer and seller. The death of one of the parties does not usually cancel the contract or release their estate from the obligations under the contract. However, it would depend on the terms of the Contract. Some Contracts contain conditions that allow either party the right to rescind the Contract if one party dies before settlement. Sometimes, the deceased person’s legal representative (such as the executor named in a Will or an administrator appointed by the Court) will agree to finish the sale/purchase and step into their place to complete the transaction. If the Seller Dies Before Settlement Where a seller passes away after exchange, the property forms part of their estate. The executor or administrator could possibly be responsible for completing the sale in accordance with the contract. In many cases, settlement may need to be delayed while the executor obtains the necessary authority to deal with the property, particularly if a Grant of Probate or Letters of Administration is required. Provided the contract was validly exchanged before the seller’s death, the purchaser may still be entitled to proceed with the purchase. If the Purchaser Dies Before Settlement If a purchaser dies after exchange, their estate may or may not remain bound by the contract. The executor or administrator may be required to complete the purchase using estate funds or finance arrangements available to the estate. Once settlement occurs, the property may be transferred to the legal personal representative or dealt with in accordance with the terms of the Will and applicable succession laws. Practical issues can arise if finance approval was based solely on the deceased purchaser’s income, making early legal advice particularly important. Joint Owners and Death Before Settlement The position can be different where there are multiple purchasers or sellers. For example: If property is being purchased by two people and one dies before settlement, the surviving purchaser may or may not still be able to complete the transaction. The outcome may depend on whether the parties intended to hold the property as joint tenants or tenants in common. Additional legal and practical considerations may arise regarding finance, ownership structure, and estate administration. Can Settlement Be Delayed? Yes. A death between exchange and settlement often results in delays while: Probate or Letters of Administration are obtained. The legal personal representative is identified. Additional documents are prepared and signed. Lenders and government authorities are notified. In most cases, the parties and their representatives will work together to facilitate settlement as soon as reasonably possible. The Importance of Early Legal Advice The death of a party during a property transaction can create both conveyancing and estate administration issues. Every situation is different, and the appropriate course of action will depend on the contract terms, ownership structure, financing arrangements, and the deceased person’s estate planning documents. Obtaining advice from an experienced NSW conveyancer and, where necessary, an estate lawyer can help ensure the transaction proceeds as smoothly as possible. Final Thoughts While the death of a buyer or seller after exchange and before settlement is understandably distressing, it does not have to bring the transaction to an end. In most circumstances, the deceased person’s estate will assume responsibility for completing the contract, although delays and additional legal requirements may arise. If you are involved in a NSW property transaction and a party has passed away, obtaining professional advice as early as possible can help protect your interests and avoid unnecessary complications. ABOUT KAY VITOGIANNIS: Kay joined the Coutts team in May 2021 working as a Licensed Conveyancer within our Property & Conveyancing team, based in our Narellan office. Kay has over 20 years of experience in the Legal industry. She began her journey in CBD Conveyancing firms as a secretary and attained her Advanced Diploma in Conveyancing in December 2010. For further information please don’t hesitate to contact: Kay Vitogiannis Licensed Conveyancer info@couttslegal.com.au 1300 268 887 Contact Coutts today. This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you. Contact Us