Written by Michelle Oliveira

When contracts are signed, there is a legally enforceable agreement. But what happens if a
party in the agreement passes away? The question is then whether the agreement remains intact, or if it
can become null and void?

In a recent case, a Superior Court judge upheld the enforcement of a purchase and sales
agreement where the seller passed away prior to the closing. The case, Liberty Hill v. Fernald, Lawyer’s
Weekly No. 12-044-22, was brought by the buyer against the Estate of the Seller to enforce a settlement
agreement in which the deceased had agreed to sell his condo unit to the buyer for $260,000.00. After
his death, the seller’s nephew, Seth Fernald, became legal representative of the Estate and listed the
property for sale with a broker. When the buyer sued to enforce the original agreement, the Personal
Representative of the Estate argued that he had a fiduciary duty to solicit better offers than what was
originally agreed to, citing G.L. c, 202, Section 38.

In the case of Liberty Hill, since the purchase and sales contract had been entered into prior to
the decedent’s death, the court held that M.G.L. c. 202 Section 38 is trumped by G.L. c. 204 section 1,
which provides for specific performance of a real estate contract that has been entered into by a
decedent prior to their death.

When a license to sell is to be obtained, it is common practice for an Estate to include language
confirming that they have the right to solicit additional offers pursuant to their fiduciary duty; however,
in the present case, G.L. c. 204 section 1 gives the court jurisdiction to enforce specific performance of
the agreement.

Had there not been a valid contract prior to the seller’s death, this case may have turned out
differently. Liberty Hill v. Fernald reinforces the notion that in every contract, there is an implied
covenant of good faith and fair dealing. It also ensures buyers that when they enter into an agreement
with a seller to purchase property, that contract is a legally enforceable agreement, irrespective of
whether or not the seller dies prior to performance.

If you have questions about establishing estate plans or purchase and sale agreements and have
questions about how to proceed, please contact Michelle Oliveira at moliveira@pkboston.com for a
consultation.

The above information is designed to provide a helpful overview of a relevant topic. It does not constitute
legal advice nor should it be construed as such. Please do not take action based on the above
information without seeking formal legal advice.