Executor: Purchase and Sale Agreement
In Onanian v. Leggat, 2 Mass.App.Ct 623, 317 N.E.2d 823 (1974) an executor, who agreed to sell the decedent's real property to a person for a certain price if the executor obtained a license was not excused, by virtue of executor's duty of obtaining the highest possible price, from performing on such agreement when a higher offer was received. The executor found himself "between a rock and a hard place": If he honored the contract he'd be sued by the devisees; if he accepted the higher offer he'd be sued by the purchaser under the agreement.
The legislature, two years after the decision in Onanian, softened its blow. G.L.c. 202, §38 was passed. That statute provides as follows:
After the entry of a decree authorizing or licensing an executor, administrator, guardian, conservator or trustee to sell real estate at a public or private sale, provided: (a) the notice of the petition for license to sell real estate and of the time and place appointed for hearing, the same shall have been given by publication at such times and in such newspapers as the court orders, and (b) there shall have been no appearance entered against such sale prior to the entry of the decree or where such appearance shall have been entered and withdrawn prior to the entry of the decree, notwithstanding the fact that an appeal may have been taken prior to the expiration of the period allowed for an appeal therefrom, it shall be conclusively presumed that the amount of the advantageous offer stated in said petition for license to sell real estate is the highest possible price obtainable for the real estate described in such petition and that the executor, administrator, guardian, conservator, or trustee has fully satisfied his fiduciary duty to obtain the highest possible price for such real estate.
The statute, although not completely absolving the fiduciary if a higher offer is made, insulates the fiduciary from the problems posed by Onanian, at least after the license is in fact obtained (provided that parts (a) and (b) of the statute are observed.)
To take advantage of the statute the purchase and sale agreement should contain the following language:
This agreement is contingent upon the executor (administrator) herein obtaining a valid license to sell from the [County] probate court for the price herein stated after due notice of the time and place appointed for the hearing on said petition has been given by publication at such times and in such newspapers as the court orders and there has been no appearance entered against such sale prior to the entry of the decree or if so entered such appearance has been withdrawn.
The license, of course, is not necessary to protect the buyer in the event that there is a power of sale under the decedent's will. However, in such a case the license protects the seller from the unfortunate result reached in Onanian.
1 Under Onanian the executor could have prevented the "no win" situation by including language in the contract that provided that the contact was contingent not simply upon the obtaining of the license but also upon the seller receiving no offer to purchase the premises at a price higher or upon terms more favorable than those specified in the contract. Of course, no buyer would agree to such terms. [Back to Text]