What happens when an individual buyer or seller dies prior to
the completion of a transaction involving real estate? This blog
post discusses the complications that can arise in real estate
transactions where there is a piece of land under contract and the
individual seller or buyer dies prior to the completion of the
transaction.
At common law, a contract may be discharged or set aside on the
ground of frustration where an unforeseen event renders the
contract physically or commercially impossible to
fulfill.1 Courts have considered whether the death of a
party to a contract for a real estate transaction amounts to
frustration of the contract, but have held that the contract will
only be frustrated if there is some personal aspect of the deceased
that was central to the contract. In a 1996 case called
Butterfield v Todd Estate, the deceased had entered into
an agreement with the plaintiff to jointly purchase a property and
share the mortgage and maintenance payments. The executor of the
deceased’s estate refused to fulfil the deceased’s
obligations under the contract. The British Columbia Court of
Appeal held that the estate was obligated to pay the deceased’s
share of the purchase price of the property and to share mortgage
and maintenance payments. These were financial obligations of the
deceased that were not something that only he was capable of
performing personally.2
Given the above, in most cases, if a seller or buyer dies prior
to the completion of a real estate transaction, then the obligation
to complete the transaction on behalf of the deceased falls to
their executor and is not extinguished by reason of such death.
There may be a delay to the completion of the transaction while an
executor or administrator is recognized to administer the
deceased’s estate. Such a delay may be particularly problematic
if the transaction is part of a land assembly, as the entire land
assembly and redevelopment process could be stalled.
In British Columbia, one way to minimize the delay caused by the
death of a seller is to apply to court on an urgent basis for a
limited grant of administration allowing the applicant to deal
specifically with the land under contract rather than any other
aspect of the deceased’s estate. The provisions of the
Wills, Estates & Succession Act give the courts the
jurisdiction to grant this type of relief.3 To obtain a
limited grant like this, the applicant must show that there are
special circumstances, that such an appointment is necessary and
that it does not prejudice the interests of the beneficiaries of
the deceased’s estate.
Footnotes
1. Naylor Group Inc v Ellis-Don Construction
Ltd, 2001 SCC 58, paras 53-55.
2. Butterfield v Todd Estate, 1996 BCJ No. 826
(BCCA).
3. Berkner (Estate), 2017 BCSC 619.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
