New York Real Estate Lawyers Blog
The timing of death is never particularly welcome. Some families are prepared, in that the deceased was elderly, maybe ill, and living in a nursing home. Perhaps such a person also had the foresight to have their attorney prepare her Will and other estate documents. Others may pass away at a relatively young age, in the prime of life, with ongoing financial and personal activities. This post will examine the legal ramifications of passing away while a legal matter is pending.
Imagine that the deceased was a party to a contract concerning the sale of a house which has not yet closed. The first step that the survivors would need to undertake is to review the contract and determine if it addresses the potential death of one of the parties before the closing. In most cases, the seller is bound to the terms of the contract through her successors. This means that the survivors cannot decide to nullify the contract and move into the house. However, the seller is not available to conclude the transaction. The attorney for the seller would need to apply to the Surrogate’s Court to apply for Letters Testamentary or Letters of Administration , which appoints the appropriate fiduciary to act for the Estate in order to complete the closing. Should circumstances warrant, it may be prudent to apply for Preliminary Letters Testamentary or Preliminary Letters of Administration, to permit the sale to conclude if it is jeopardized by a continued delay.
If the deceased was the potential purchaser of the house, the contract is likely to allow the purchaser’s survivors to cancel the contract. This is a logical result, as the transaction is inherently dependent upon the purchaser maintaining a job in order to pay the mortgage and other carrying costs of the house. Forcing this transaction to conclusion is a cruel result. In most cases, the downpayment is refundable. However, some contracts only provide that half or none of the downpayment would be refunded. It is advisable to have your attorney negotiate a favorable disposition for the downpayment in this instance when representing a purchaser, even if he is a young person.
A deceased person may have been a party to an ongoing litigation. In such a case, the litigation is stayed by the Court until the attorney representing the deceased person applies to the Surrogate’s Court for Letters Testamentary or Letters of Administration. As in the real estate example, a fiduciary needs to be appointed to carry on behalf of the deceased person, who can no longer participate in the litigation.
An analysis of particular types of litigation that could be pending is as follows. A landlord-tenant case conducted on behalf of the deceased tenant may become irrelevant. If the tenant held over after the termination of the lease and none of the survivors has a succession right or other right to continued occupancy, the Executor or Administrator may wish to end the lawsuit. If the landlord has an Executor or Administrator appointed, it may be worthwhile to continue a lawsuit for nonpayment, so that the Estate can collect from the tenant.
Is it sensible to continue to conduct a foreclosure case on behalf of a deceased person? If there is equity in the property, it may make sense to have an Executor or Administrator appointed, in order to work towards harvesting the equity at a third party sale or to obtain the surplus after auction. On the other hand, if the property is underwater and likely to result in a deficiency judgment, there is no reason to continue the case.
Partition cases are interesting to evaluate in this scenario. As this blog has discussed , many partition lawsuits involve those who are relatives. Two siblings may be in such a partition case. Perhaps they are also each other’s closest relative in terms of intestacy. This means that if one of them dies during the pending litigation without a Will, then the ironic result is that their opponent in the litigation will inherit the very property that is in dispute. The best way to avoid this result is to engage an experienced attorney to draft your Will and other estate documents, so that presumably someone besides one’s opponent in litigation will inherit your Estate.
We appreciate the difficulty that any death can bring, whether or not it is “timely”. Our attorneys are available to consider all pending matters and to render appropriate strategy and advice.