Exchanged contracts on a property and the owner has died

buntyday

hi
my parents have exchanged contracts last week on a property they are selling as well the property they are buying (purchase property under a power of attorney the son of the owner of the property) however later on in the week the sons mother died. My parents solicitor have now informed my parents that the property has to go to probate even though the exchange had taken place. If they dont complete next month where do they stand with both their purchase and their sale ?
My parents are also old and have ordered new furniture etc for the new property via credit card can they cancel the orders ?

G_M

I'm surprised.

I would have thought that once Exchange has taken place a legal contract is formed which is binding on the seller, or the seller's Estate.

However, I am not a lawyer, and have no direct experience, so my view is in no way reliable.

Hopefully Richard Webster will be along later this evening......

ValHaller

On the sale of theirs, they are bound.

And I think the position on the purchase will be that the Estate of the Late Seller will also be bound. However the problem will probably be that without probate there is no one empowered to act on behalf of the Estate. This in turn will delay the purchase until executors and administrators are appointed and the penalties in the contract will come into effect.

So, OP, your parents are piggy in the middle. They need to confirm with their solicitor exactly how this might play out and what their options are. Once they know this, they will need to talk to their Agent and find out what the chain is below them to make a decision on whether to move out ( - and if so, where to) and look at whether the chain can be held together.

Now, assuming I am right about the legal position, I think if the son with the PoA came on here asking for advice on his own position, I would be advising him not to rush to get probate, but to study the position carefully and understand what to do before he gets it. For example, the will might be in conflict with the sale, (eg money in the Estate goes to A, but the house goes to B and B loses out if the house is sold). Obviously, time is ticking on the son in terms of penalties eating away the inheritance, but if I understand matters correctly, I doubt he would be personally liable for delay until he gets probate and takes up the role of executor.

The short of that is that while the son might work quickly for what he has to do, the delay may be substantial.

pinkshoes

I'm 99.9% sure the estate is legally bound to complete, but I also don't think you can complete before probate (to prove the seller legally owned the property and was his to sell), which could take a while.

Edit:

here's a case from a while back:
https://forums.moneysavingexpert.com/discussion/1773837

lauraland

My understanding is that the contract doesn't die with the person i.e. its still legally binding and the purchase/sale should go ahead.
My mum died after exchanging contracts on a house and that was what we were told by both a solicitor and a barrister. I felt it was absolutely unreal, I didn't want to go ahead with the purchase due to living in a different country and the fact I had enough on my plate after just losing my mum but we had no choice in the matter (unless we wanted to get sued!).
The legal matters did delay everything and it took a year before the purchase actually completed so your folks may have a long wait on their hands before they eventually move. hth

Yorkie1

Re. the furniture orders, these are generally not cancellable afterwards unless they are within the cancellation period afforded either by distance selling regulations or a cooling off period given by the store.

There's nothing to stop them asking the store for some goodwill, though. It might depend on whether they've started making up the orders.

If all else fails, they'll probably have to go through with the order and put the goods into storage or their 'interim' property.

Do your parents still want to buy the house they are buying? Although legally bound to the contract, I wonder whether there might be any scope for mutual release from the contract if not, and if the seller's son wants to put things on hold rather than be bound to the sale once probate goes through?

martinsurrey

As harsh as it sounds your parents need to think of themselves first.

As the house has now exchanged the estate now inherits the terms of the contract, which includes the responsibility to complete.

As others have mentioned it will not happen, probate and all of the paper work will delay completion, but by starting to sort things out early you will avoid any real mess later on.

Things to consider.

Speak to your solicitor, any fees caused by their delay to complete should be claimed back from the estate.

In terms of living arrangements, your parents can rent a house of similar quality and size, and claim the costs back from the estate. The difficulty in this is that you don’t know the length of the delay, so short term rental will be needed (akin to holiday rental). It might be worth talking to your solicitor about this, maybe a deal can be done with the estate to delay completion 12 months and they cover the full costs.

Any storage costs are also claimable from the estate, plus damages and other expenses.

The problem about getting out of the contract is that it is a decision that someone in the estate has to make, and until it is determined who can make the decisions, and then deciding what the best one is, will take time (for example, if they pull out now, the house will be empty, and priced for a quick sale, which could net less than the contract price your parents have signed, in which case by pulling out of the deal the executors of the estate could be in trouble), so the above chain of events WILL kick in, being proactive and getting the legalities sorted now, will make things easier down the line.

I know it sounds harsh, suing (or starting legal discussions with) the estate of a recently deceased person, but handled carefully and with compassion, it is better that than ending up in a lawsuit in 8 months time.

Richard_Webster

I think the estate is bound by the contract and therefor ethe executor should be looking at getting probate expedited. I have never done it, but I think there is some kind of express procedure that allows for a quick probate limited in authority to simply allowing the sale to proceed.

Buyer may have a get out if the seller doesn't get on with it but I am not sure that the estate has any get out.