Brian, the seller died before we could close, can the buyer make the seller’s heirs honor the contract?

Yes.

The Virginia Supreme Court answered this question in the affirmative in the case of Moore's Adm'rs v. Fitz Randolph, 33 Va. 175 (1835).  This result is true not only in Virginia, but to my knowledge in all fifty states.  In many jurisdictions the answer will turn on whether the contract contains language stating that it is “binding on the heirs” of the parties.  Curiously, The REIN Standard Purchase Agreement no longer contains that language (the VAR contract still does), but the law (at least it seems in Virginia) presumes that it is meant to be binding on the seller’s estate anyway.

 

Sometimes the seller dies before the deed is executed and so the question becomes: who will sign the deed?  Again, Virginia law provides a pretty clear answer.  Va. Code § 64.1-148 provides that “When any deceased person shall have executed and delivered a bona fide written contract of sale, purchase option, or other agreement binding such deceased person, his heirs, personal representatives, or assigns, to convey any real property or interest therein, his personal representatives may, upon full compliance by the purchaser with the terms and conditions of such contract, option or agreement execute a deed and do all things necessary to effect the transfer of title to such real property or interest therein to the purchaser and such transfer shall be as effective as if it had been made by the deceased obligor.”

 

It may well be that closing will be delayed somewhat when a seller dies (for example, if the seller had not signed the deed you might need someone to qualify on the estate in order to sign the deed), but as you can see it is clear that the buyer can insist and require the estate to conclude the transaction.

Is the reverse true?  Can a seller require a deceased buyer’s estate to perform the contract?  While in theory it is true (the case above refused to answer that converse question), bear in mind the practical nature of our modern contracts – financing based on the buyer’s income not to mention actually being alive, owner occupancy, etc. would almost certainly dictate a different result.  Perhaps if the contract were a straightforward, non-personalized, cash deal one could bind a buyer’s estate.  Otherwise I would say no.

 

Brian “Sixth Sense” Lytle