Buying or selling a home is always a major financial decision. It’s stressful enough under normal circumstances, but what happens if one of the parties passes away before closing?
In Ontario, the good news is that a signed Agreement of Purchase and Sale(APS) generally remains binding, even if a buyer or seller dies before the deal is completed. The law ensures that the estate of the deceased step into their shoes and carry out the transaction.
The APS Continues to Bind the Estate
Most Ontario transactions use the standard OREA Agreement Form, which provides that the “heirs, executors, administrators, successors, and assigns” of both parties are bound by the agreement.
This means that once the APS is signed, the estate of the deceased must honour it. Several statutes reinforce this principle:
- Trustee Act – permits the personal representative (Estate Trustee) to fulfill the deceased’s contractual obligations, including completing the sale or purchase.
- Estates Administration Act (EAA) and Land Titles Act (LTA) – provide that title to the property vests in the estate’s personal representative, allowing them to transfer, sell, or distribute it as needed.
If the APS was firm (that is “unconditional”) before death, the estate is normally required to proceed with closing.
Complications That May Arise
1. Probate Delays
Before acting, the Estate Trustee must obtain probate (a Certificate of Appointment of Estate Trustee). This can take 8–12 weeks or longer, depending on the court’s backlog and estate complexity. Closing dates often need to be extended—or, in some cases, the parties may agree to terminate the deal.
2. Conditions in the APS
- If the deal was unconditional (all conditions waived or fulfilled), the estate must close.
- If conditions remain open, for example, financing or inspection, they must still be dealt with within the original timelines. Death does not pause these deadlines.
- If conditions expire unfulfilled, the agreement becomes null and void, and the deposit is returned. (be careful: double check the wording in the APS)
3. Part Performance
Even if a deal isn’t technically enforceable (for example, where the APS is informal or incomplete), a court may still enforce it under the doctrine of part performance especially if one party relied on it to their detriment. This is quite unusual.
If the Estate Fails to Close
If an estate does not complete the transaction, the other party can pursue several remedies:
- Rescission – cancelling the APS and returning both parties to their original positions.
- Damages – compensation for financial losses.
- Specific Performance – a court order compelling the estate to complete the transaction.
However, even with a valid claim, recovery can be limited. You must mitigate your losses (for example, by re-listing the property). And if the estate is insolvent, your claim may rank behind secured creditors.
Considerations
The death of a buyer or seller usually does not void an Ontario real estate deal. The APS and Ontario’s estate laws are designed to ensure that estates are both empowered and obligated to complete the transaction.
Still, practical issues, probate delays, conditional offers, or disputes among beneficiaries can complicate matters. These situations may require extensions, mutual releases, or even litigation.
If a party to your transaction passes away, it’s essential to seek legal advice. Understanding your rights and remedies can help you protect your interests and navigate the complexities of closing through an estate.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com