National Real Estate Exam (PSI)ContractsMedium
A property owner makes a written offer to sell a rental building to a buyer. Before the buyer accepts, the owner dies unexpectedly. What is the legal status of the offer?
- AThe offer is automatically terminated by the owner's death
- BThe offer becomes an option contract upon the owner's death
- CThe buyer's heirs may accept the offer on the buyer's behalf
- DThe offer remains valid and passes to the owner's estate
Show answer & explanationAnswer & explanation
Correct answer: A. The offer is automatically terminated by the owner's death
An offer is automatically terminated by the death or incapacity of either party before acceptance occurs, since a valid meeting of the minds can no longer take place. The estate cannot accept an offer that no longer exists.
Why the other options are wrong
- B. Death does not convert an offer into an option; options require separate consideration and agreement.
- C. This scenario involves the buyer, not the seller's heirs; irrelevant and incorrect.
- D. An unaccepted offer does not survive the offeror's death; it is terminated, not transferred.
Termination of Offer by Death
An offer is automatically terminated if either the offeror or offeree dies or becomes incapacitated before acceptance.
- Applies before acceptance only
- Once accepted, a contract survives death of a party
- Estates cannot accept offers made to a now-deceased person
Memory trick: Death before 'yes' means the offer dies too.