There could be many things affecting the title, and those things vary from state to state. For example, here in PA, the steps would be as follows...
1. Current title would have to be located (not as easy as it sounds sometimes. Titles get thrown away, misplaced, etc).
2. Death certificate of owner would have to be provided to DMV, and title would have to be transferred to next appropriate next of kin (Again, many possible "ifs")
3. New title would have to be received by next of kin.
4. New owner (next of kin) would have to sign over title to purchaser (ebay seller).
5. Title would have to be received by purchaser (ebay seller).
6. Purchaser would sign title over to new purchaser (you).
Depending on how it was done, each step could take several weeks. And here's another wrinkle: Suppose the guy that died did not have a title in his name? You would have to try and track down the last "real" owner of the vehicle (might be impossible), or just sidestep the laws and use a title company to get a new title.
Tip: When buying a car on ebay, or any other website, ask if the seller has a clear title in his/her name. If not, you should probably stay away from the vehicle, unless that state does not issue titles to older vehicles. In that case, you need to get, at the very least, a notarized bill of sale that includes positive identification of the seller. Sounds like that may not be enough for Canadas laws, though.
I think you did the right thing by filing with ebay. You can always mark it resolved at a later date. Its his fault for not having the proper paperwork in the first place. Something may be a little fishy, because if it were a legitimate estate sale, all proper paperwork would have been provided to him. Of course, the term "estate sale" can mean a lot of things, including the survivor just putting the cars out in the yard with a for sale sign on them.
