What happens when one of the parties to a real estate contract dies before the transfer can be completed? How do you enforce real estate transfer contracts upon the death of the transferor? How can you avoid the paternalistic supervision by a Probate Court over the sale of the property?
This article will cover how to expeditiously enforce real estate contracts in Probate Court that were either created during the life of, or upon the death of the decedent. We will do this while carefully circumventing the Court’s requirement of confirming the sale of property before transfer.
Probate Code section 850 is the Probate Court’s specific performance statute. Section 850 sets forth the procedure for obtaining a court order approving and directing the enforcement of a real estate contract. This avoids the need to commence an independent civil action for enforcement. More importantly, it sidesteps the risk of the Probate Court mandating a public auction of the property instead. (Estate of Quackenbush (1975) 53 CA3d 751, 753.) Generally, section 850 applies to enforcing real estate transfer contracts made while the decedent/party was alive, but where death occurred before conveyance could be made. (Prob. C. Section 850(a)(2)(A),) It also applies for contracts to transfer upon, or after the death, of the decedent/party. (Prob. C. Section 850(a)(2)(B).)
However, this statute does not create a special substantive law for specific performance, and therefore the enforceability of these contracts will still be governed under standard legal and equitable requirements. Thus, in order to enforce a contract for the transfer of real estate in Probate Court, while avoiding the Court’s separate probate confirmation authority, the proponent of enforcement must meet the following equitable specific performance elements:
The issue most often determinative in these enforcement matters is whether the essential term of price was sufficiently certain.
The lack of specificity of a price term in a real estate transfer contract defeats the equitable remedy of specific performance. This results in the Probate Court supervising the sale of the property while being held for public auction. For example, in the Estate of Quackenbush, the Court held that the lessees’ right of first refusal option to purchase the real property, granted during lessor/decedent’s life, was not specifically enforceable. This was because the lessee/purchaser had a mere right of first refusal to submit a proposal of the substance of the terms to purchase, and therefore, “not an option to purchase at a fixed or determinable price.” (Estate of Quackenbush 53 CA3d at 757.) (emphasis added).
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See related: Probate: When is it Necessary?