What Happens When a Seller Dies Before the Closing Date in a Real Estate Sale?

By Slonee Malhotra and Victory Adeosun

It’s every homebuyer’s nightmare. You’ve finally found your dream home, signed the paperwork, and started counting down to closing day, only to receive shocking news: the seller has passed away. What happens now? Does the deal collapse? Can you still move forward? Who signs the closing documents? These questions are more common than you might think. In Ontario, when a seller dies before closing, the law, not emotion, determines what happens next.

Do Real Estate Deals Survive the Seller’s Death?

To understand what happens next, we first need to look at whether the contract itself survives the seller’s death. Once a buyer and seller sign an Agreement of Purchase and Sale (APS), it becomes a legally binding contract. That agreement doesn’t automatically end if one of the parties passes away. The standard form of APS notes above the signing lines in Clause 29 that “the heirs, executors, administrators, successors and assigns of the undersigned are bound by the terms” of the agreement. As such, the estate become legally responsibly for fulfilling the contractual terms. Death, by itself, does not void a real estate contract. The obligations under the APS are not personal in nature, so the deceased person’s estate can carry them out if needed.

In Butterfield v. Todd Estate, for example, the British Colombia Court of Appeal affirmed that the death of a buyer did not frustrate the agreement because the estate could still perform the financial obligations involved.[1] The bottom line is that a signed APS lives on, even if one of the parties to the APS does not.

Role of the Estate Trustee and Probate Delay

Under section 2(1) of Ontario’s Estates Administration Act, the estate takes on not only the seller’s assets but also the seller’s existing obligations, which include the duty to complete the contracted for sale.[2] However, before the estate can legally transfer ownership of the property, the estate trustee, also referenced as the executor, must obtain a Certificate of Appointment of Estate Trustee, commonly known as probate. Until the Certificate of Appointment of Estate Trustee is granted, the estate trustee or executor has no legal authority to sign documents or convey title on behalf of the estate.

Time of the Essence and the Doctrine of Double Default

Real estate contracts usually treat time as “of the essence.” This means that all deadlines, especially the closing date, are legally important and must be met. Section 20 of the standard OREA Agreement of Purchase and Sale states:

“Time shall in all respects be of the essence hereof.”

When something unexpected happens, such as the death of the seller, neither party may be able to close on time. In these cases, courts often apply what’s known as the “double default doctrine.” As explained in King v. Urban, this principle means that once both sides are unable to close on the agreed date, time is no longer of the essence.[3]

For example: If the closing was set for June 1 but the seller dies in May, neither side may be ready to close on time. In that case, time is no longer “of the essence” until one side (usually the buyer) sets a new date in writing. This gives the estate time to get its legal affairs in order before closing.

Specific Performance and Damages

Ontario courts have not hesitated to grant specific performance where a buyer seeks to force an estate to complete the transaction. In Datta v. Eze, the seller’s estate attempted to back out of the transaction. The Ontario Superior Court found the property was unique to the buyers and awarded damages calculated as a substitute for specific performance, emphasizing that they could not find a comparable substitute home in a hot market.[4]

Buyer’s Checklist: What to Do When the Seller Passes Away

If you find yourself in a situation where the seller has passed before the closing date, follow these key steps to keep the transaction alive and the buyer’s interests protected:

1. Contact Your Real Estate Lawyer Immediately: Notify your lawyer as soon as you learn of the seller’s passing or incapacity. Your lawyer will consult with the seller’s lawyer to determine how long it could be before probate may be granted and will help you in negotiating any extension terms.
2. Review the APS: Check for any clauses addressing delays, death, or force majeure. Keep copies of all amendments, correspondence, and notices.
3. Keep Your Financing in Order: Check your mortgage pre-approval or rate-hold expiration date. Ask your lender about extensions or requalification if the closing is delayed.
4. Track All Communication and Expenses: Maintain a log of all phone calls, emails, and updates regarding the transaction. Keep receipts for any additional inspections, storage costs, or accommodation expenses you incur due to the delay.
5. Stay Flexible but Protect Your Rights: Understand that the estate may need time to settle affairs, but you are entitled to performance once legal authority is established. Always review with your lawyer before signing any waiver or amendment.

If you’re dealing with a delayed closing or experiencing uncertainty due to the death of a seller, contact the real estate lawyers at Sorbara LAW for trusted advice and representation.