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34. What will determine who receives the proceeds?
The personal representative of the seller's estate wants to distribute the proceeds of the real property sale. The seller's will was executed many years ago and was duly admitted to probate. Paragraph 5 of his will leaves all of the seller's real property to his son, and Paragraph 6 leaves the residue of the estate to the seller's daughter. No other provisions of the will are pertinent to the question regarding to whom the proceeds of the sale should be distributed.
Last year, a buyer and a seller entered into a valid contract for the sale of a parcel of real property. The contract contained no contingencies. The seller was killed in a car accident before the parcel was conveyed, but the closing eventually took place with the conveyance by a deed from the personal representative of the seller's estate.
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If the seller dies, the bare legal title passes to the takers of his real property, but they must give up the title to the buyer when the contract closes. When the purchase price is paid, the money passes as personal property to those who take the seller's personal property.
If the buyer dies, the taker of his real property can demand a conveyance of the land at the closing of the contract. The majority rule is that takers of the real property will take it subject to the vendor's lien for the purchase price. As a practical matter, the takers of the real property will have to pay the price unless the testator specifically provided to the contrary.
C is correct. If the seller dies during this time period leaving a will that devises the real estate to one person and the personal property to another, and if the contract contained no contingencies or all contingencies had been satisfied at the time of the death, the doctrine of equitable conversion applies. The determination of who will receive the proceeds thus depends on who had equitable title. In this case, the son had only a legal interest in the land at the time of the seller's death, and the daughter had the equitable interest in the proceeds and should receive them.
A is incorrect. It does not matter whether Paragraph 5 refers specifically to the parcel sold or simply to «all of my real property.» The seller died during the executory time period, which is the time between the contract signing and the closing. The contract contained no contingencies, and thus the doctrine of equitable conversion applied as of the date of contract signing and determines who is entitled to the proceeds.
B is incorrect. It does not matter whether the closing date was scheduled before or after the seller's death.
D is incorrect. It does not matter whether the sale was completed in accordance with a court order or not. If the seller had died after the closing, the proceeds would have passed to the daughter, who received the residue of the estate. As it was, the seller died during the executory time period between the contract signing and the closing. As explained above, the contract contained no contingencies, and thus the doctrine of equitable conversion applied as of the date of contract signing and determines who is entitled to the proceeds.