Contract Options Available When One Spouse Dies Before Completing a Home Sale
UPDATED: June 19, 2018
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Contracts are enforceable against ALL the parties who sign them. Usually when one party breaches a contract, the other party's compensation or recourse is monetary damages; that is, to be paid a sum of money equivalent to the loss they suffered from the breach. Sometimes the courts will order what's called "specific performance;" which means the breaching party will be ordered to honor the contract and perform whatever is required under the contract.
Real estate is one of the cases where specific performance may be granted, since there is a presumption that real estate is unique and that receiving monetary compensation may not be an adequate substitute. If both members of the couple signed the contract then the contract would still be enforceable against the survivor, even after his or her spouse passed away. In most cases, the house would pass to the survivor without having to go through probate, since real estate is normally owned by married couples as a joint tenancy with right of survivorship. That means that when one passes, by law, the other instantly gets the home. Since the survivor would own the home, he or she would have the power to convey or sell it. If that person also signed the home sale contract, he or she would be contractually bound to go through with the sale. It would probably be reasonable and appropriate to allow the survivor some extra time to put affairs in order, but the contract is enforceable.
If only one member of the couple actually signed the contract, then it's not clear that it could be enforced against the survivor. Contracts are only enforceable against those who are parties or signatories to them. If the survivor wasn't a party to the contract, it may not be enforceable.
Furthermore, if the real estate was owned by the deceased spouse individually, rather than by the two spouses jointly, then the survivor is not automatically entitled to it by law. Instead, he or she would have to wait until the home is distributed by will. If there is no will, the surviving spouse or partner would have to go through intestate succession. In either case, the survivor would not actually own the home right after the death and literally couldn't sell it even if they wanted to. In many cases, it will be possible to enforce the contract of sale. If the surviving partner or spouse signed the contract, and had been an owner of the house, then he or she can legally complete the sale. The exceptions are few, such as the deceased person being the only one who signed the contract or if the deceased owned the home as an individual.