What Happens If the Vendor Dies Before Settlement?

 
 

It’s rare — but it does happen. A vendor signs a Contract of Sale, then passes away before settlement takes place. So what does that mean for the buyer? Does the contract still stand? Can you still settle?

Here’s what happens under Victorian law when a vendor dies before settlement — and what you should do.

1. The Contract Remains Binding If a valid Contract of Sale was signed before the vendor’s death, the contract usually remains binding on their estate. This is because the vendor’s legal interest in the property passes to their personal representative (executor or administrator), who is then required to complete the sale.

The buyer’s rights do not automatically disappear — but the timeline and documentation may change.

2. Title Transfer Must Be Handled by the Estate The executor or administrator must prove they have legal authority to deal with the deceased’s assets. In practice, this means:

  • Obtaining a Grant of Probate (if there is a will)

  • Or Letters of Administration (if there is no will)

Until probate or administration is granted, the estate cannot legally transfer the property.

3. Settlement Is Usually Delayed Because of the need for probate or administration, settlement is almost always delayed. Depending on the complexity of the estate, this can take weeks or even months.

The buyer is usually not in default if the delay is caused by the vendor’s death — but the contract should allow for a reasonable extension.

4. The Vendor’s Legal Personal Representative Must Complete the Sale Once probate or administration is granted, the legal personal representative signs the transfer documents and proceeds to complete settlement as if they were the vendor.

If the representative refuses to proceed, the buyer may seek to enforce the contract through legal action.

5. The Deposit Stays in Trust The deposit paid by the buyer remains in the stakeholder’s trust account (usually the real estate agent or the conveyancer) until settlement or formal termination.

6. What Buyers Should Do If you’ve signed a contract and learn the vendor has died:

  • Immediately notify your conveyancer

  • Request formal confirmation from the vendor’s representative

  • Seek confirmation that probate or letters of administration are being pursued

  • Ask your conveyancer to negotiate a formal extension of the settlement date

How We Help At Victorian Property Settlements, we:

  • Confirm the legal status of the estate and the personal representative

  • Negotiate fair extensions for buyers where required

  • Liaise with estate lawyers and handle document updates

  • Keep your rights protected if delays occur

Click here to get in touch if your settlement has been affected by a vendor’s death.

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers. Visit: www.victorianpropertysettlements.com.au