Although the death of a seller seems unlikely it is in fact one of the most frequent questions we are asked by clients thinking about the long term nature of a Lease Option.

The answer to this question however depends on various circumstances and below we have tried to outline some scenarios and the likely outcomes.

Mr and Mrs A

Mr and Mrs A are married and own their property jointly so, if Mr A dies, Mrs A inherits the joint property automatically. To transfer the Property into a single name all that is needed is to send a copy of the Death Certificate to the Land Registry, the title will then automatically go into Mrs A’s name.

Before Mr A’s death Mr and Mrs A entered into a Lease Option to sell the Property. As a party to the Option Agreement  Mrs A remains bound by its terms and obligations.

Mr B and Miss C

Mr B and Miss C aren’t married but own the house as “tenants in common” as trustees of their separate shares.

Therefore, if Mr B, dies Miss C does not automatically inherit.

In this case Probate (or if there is no Will, Letters of Administration) will need to be granted in respect of Mr B’s Estate. If Mr B made a   Will the property passes to the Executors of Mr B’s Will, and if there is no Will, then effectively the property passes to Mr B’s next of kin. Working out who a next of kin can also be complex.

Until Probate or Letters of Administration are obtained no transfer of the property will be possible and it may also be necessary to appoint the Executor / Beneficiary as an additional trustee of the Property with Miss C in order to validly receive any sale proceeds.

Before Mr B’s death Mr B and Miss C entered into a Lease Option to sell the Property. Miss C and the Executor / Beneficiary will remain bound by its terms and obligations however, it may take some considerable time for the formalities in relation Mr B’s estate to be dealt with.

Mr D

Mr D owns the property alone as a single owner.

Here the situation is similar to that of Mr B as  Probate (or if there is no Will, Letters of Administration) will need to be granted in respect of Mr D’s Estate. If Mr D made a   Will the property passes to the Executors of Mr D’s Will, and if there s no Will, then effectively the property passes to Mr B’s next of kin, again this can be complicated to work out in some cases. Until Probate or Letters of Administration are obtained no transfer of the property can occur.

Before Mr D’s death he entered into a Lease Option to sell the Property. The Executor / Beneficiary will remain bound by its terms and obligations however, it may take some considerable time for the formalities in relation Mr D’s estate to be dealt with.
With Lease Options a party’s death will therefore only be a headache depending upon how close completion of the purchase is, as if it is a long way away then you just need to ensure the necessary actions are taken by the Executors / Beneficiaries.

If completion is imminent a death would unfortunately inevitably cause a delay in completion while the estates are dealt with.

However, there can also be problems if there is a sole owner or the survivor of joint owners as the mortgage lender may expect the mortgage to be repaid and steps may need to be taken such as completing the Option to facilitate this.

This information is not intended to represent legal advice upon the part of MS Law LLP and should you require specific advice please contact us.