When the unthinkable happens

No one wants to see a deal fall through, it can be frustrating and nerve wracking, and sometimes for avoidable reasons. Getting a buyer and seller to agree to price and terms can be like pushing nails through a clogged faucet, but if by some miracle you don't spring a leak during negotiations, there's still the escrow period to fret about.

Contingencies for inspections, financing, document review, attorney approval, etc, as well as non-contingency concerns like buyer remorse and cold feet can all derail moving into that dream home. So how do you avoid all these problems?

Navigating all the contingencies is a necessary part of the transaction, so the best way to go about it is proper preparation. Having realistic expectations and understanding of each element can make handling each way point smooth and relatively worry-free. Getting pre-approved is a good way to know that financing approval should be a breeze, giving the property a good look over and general due diligence (reading disclosures and reports) should pave the way for an inspection that meets expectations, working with a reputable attorney or buyer's agent leaves you feeling confident in the paperwork and knowing laws and ordinances are met. 

There, you've thought of everything, what's left?

What's left is what I experienced for the first time last year.

The first email I read one Monday morning was from the daughter of my buyer client. I was expecting something like "My mother has read the inspection report and is wiling to proceed with the purchase in spite of the leaky plumbing" but instead what I read was this: "The Lord called my beautiful mother home yesterday."

The shock from this kind of news is never a single wave, for anybody whether family, friend, or business contact or anybody. What I felt was a whole series of shock waves, over and over. Sadness for the daughter who had spent a year house hunting alongside her mom, for the husband who I knew was sick in the nursing home across the street from the condo that my client was buying, for the entire family who now with the winter holidays fast approaching would find little joy in the season. Years of plans for retirement, grandparents playing with grandkids. All suddenly changed. Ended.

My first call was to the daughter, to express my sadness at her loss, and to ask what happened. Only 6 days ago I had met with daughter and mother at my office, as we had many times lately to talk, sign papers, all steps toward buying, moving, settling in. The mother wasn't feeling well at our meeting, which I understood to be a result of the stress of taking care of her ailing husband, buying real estate, and everything else people do normally to get ready for a long cold winter in Minnesota. An MRI showed cancer and a tumor, a surprise to everyone, and only a few days later, she was gone.

My next several calls were to my manager, our company attorney, and the by-owner seller. My client was buying the condo by herself and though married, her husband had no ownership interest. Since her husband was ill, she had power of attorney for his medical and legal matters, but no one was authorized to sign for her. There was also no will or specific directives of any kind in the event of her passing.

I spend a lot of time thinking about the next moves at every point of a transaction. In every progression I've ever thought about, strategized for, from meeting a buyer for the first time all the way to closing (or cancellation), I'd never thought about what to do in the event of a death. Reading through the purchase agreement again, there were no clauses dealing with death, so the contract was still in force, but leaving in question the fate of the purchase and the earnest money, since there was now no buyer to sign anything to cancel or to close. 

Knowing my buyer and her family, it was clear in my mind that they had no need of the condo now, and since it's in a 55+ association, they would actually have no one elegible to occupy it. And it wasn't a fantastic enough deal to make it worthy of consideration as an investment, for quick resale or long term hold. At the time of death we were at the point in the purchase where we could still give notice of cancellation pursuant to the inspection contingency, and since this action doesn't require a buyer signature, I could give written notice as the buyer's agent. This is one of those things where through vicarious liability the client is bound by the actions of the agent under the rules of agency. But while notice can be given without signature, cancellation and release of earnest money cannot.

There are ways to use court actions to cancel a purchase contract, but at this point it seemed that going through probate and obtaining letters testamentary would prove to be faster. Then the legal appointee can sign the final paperwork to cancel the contract, release the earnest money to the buyer's estate, and allow the seller to sell to someone else.

What could have been done to avoid this? - Is the normal question I ask myself when a deal falls apart, but in this case the unthinkable happened. Preparing for death is such a big and intensely personal process that it's outside the scope of my buyer agent abiities. It's not a conversation anyone really wants to have with their parents, children, or anyone. When I think about writing a will and having my "paperwork in order", I think it's something you do when you are about to die. Maybe we should all get it out of the way early on and leave one less item on our checklist when our time is up. While it doesn't save any grief or pain or sadness to you or your loved ones, it may allow the ones that stay behind more time to grieve and remember you rather than spending time working through the unfortunately necessary details that come with the passing of a loved one. May we all have more time than we think we do.