What Happens If the Vendor Dies Before Settlement?
/The period between signing a contract and final settlement can be filled with surprises, but none more unsettling than the death of the vendor. In Victoria, the passing of a vendor doesn’t automatically void the sale, but it can create serious complications. As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, this is a scenario where experience and precision matter.
1. The Contract Remains Binding
If a vendor dies after signing the contract but before settlement, the contract remains binding on the vendor’s estate. This means the buyer is still entitled to complete the purchase, and the estate is legally required to perform the vendor’s obligations.
Key Point: A death does not discharge the contract, but it may delay your ability to settle.
2. Who Can Now Act for the Vendor?
The vendor’s legal personal representative (usually the executor named in their will) must apply for a grant of probate to gain authority over the deceased's estate. If no will exists, someone may apply for letters of administration instead.
Only after these are issued can the representative sign transfer documents and discharge mortgages, which are necessary steps to complete settlement.
3. What Happens to the Settlement Date?
If probate or administration hasn't yet been granted by the settlement date, the vendor cannot legally settle. In most cases, the purchaser will be entitled to delay settlement without penalty, but the contract terms matter.
A general condition (usually General Condition 34.1 in the standard REIV contract) may permit a delay in the event of death.
In practice, most parties negotiate a reasonable extension once death is confirmed.
4. Can the Buyer Walk Away?
Not immediately, but the option may arise if the estate causes undue delay.
If the vendor’s estate cannot settle on the due date, the purchaser may issue a Notice of Default. This notice gives the vendor 14 days to remedy the default (i.e., be ready to settle). If the estate fails to comply within that timeframe, the purchaser may be entitled to rescind the contract and recover their deposit.
This right is grounded in General Conditions 28 or 29 of the standard REIV contract, which governs default and termination procedures.
Key Point: Delays caused by probate are not carte blanche — the purchaser has rights if the estate can’t perform within a reasonable time.
5. Should the Buyer Lodge a Caveat?
In some cases, yes. If there's a risk that the deceased’s property could be contested by multiple heirs or encumbered by other claims, the purchaser may wish to protect their interest under the contract by lodging a purchaser’s caveat.
For more on this, see our article:
👉 Should I Lodge a Caveat When I Buy Property?
🛡️ Practical Advice for Buyers
Get written confirmation of the death and status of the estate from the vendor’s representative or solicitor.
Request a formal extension of the settlement date if probate hasn’t been granted.
Confirm your lender is prepared to wait or extend approval timelines.
Consider issuing a Notice of Default if delays persist beyond what is reasonable.
Discuss lodging a caveat to protect your interest on title.
Keep written records of all delays and representations from the estate or selling agent.
🤝 Final Word
While unsettling, the vendor’s death doesn’t cancel your contract, but it does add risk and delay. Drawing on the insights of a seasoned practitioner with decades of experience, David Dawn at Victorian Property Settlements ensures these complex transitions are handled with professionalism and care.
Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
📍 Frankston-based. Serving all of Victoria.
🔗 www.victorianpropertysettlements.com.au