Monday, April 28, 2014

Can you sell Mom's house?

Several folks in my generation are helping their aging parents relocate to more supportive living situations. This often means selling an existing property and making commitments to lease or purchase in the new digs.

Aging folks are in various states of cognitive ability, physical ability, and cooperate in the process to varying degrees.  Some elderly are thankful to be relieved of the burden of their own house or condominium and look forward to an easier lifestyle with more social and engaging opportunities.  Others feel pushed from their home too soon.

Just as folks are in varying states of ability and cooperation, property is owned a variety of ways; living trust, family trust, with a now deceased partner or spouse.  And often who has authority to sell the property varies; the person on title, a trustee, a co-trustee, durable power of attorney, or a power of attorney specific to the of that property and so on.

Often the elderly and their family think these papers are in order, and are caught by surprise when a real estate agent, escrow company or real estate attorney needs more or different documentation.  Getting such papers in order at the last minute is hard, and can often come with some delays.  I highly suggest revisiting such arrangements even if you think it is all good. A quick consult with a real estate attorney ( I can suggest a few) is well worth avoiding the panic and hassle later.

Here are a few things I have seen, and we have experienced in our family.

 Often property is held in trust. Trusts offer a variety of benefits.  Only trustees of the trust have the authority to sell the property.  Sometimes heirs are successor trustees; and have the authority to sell the property in case of the trustee's death. BUT, successor trustees don't have that authority if the trustee is still around...even if the trustee is incapacitated.  With a trust, there can be co-trustees, who both have authority to sell the property, and only one co-trustee's signatures are needed.  Some trustees will have named someone to act in their place in case they are incapacitated, and even spell out who is empowered to make the judgment about the trustee's capacity to act - sure hope that specific doctor is still practicing when the time comes. Powers of attorney do not work with trusts.

Powers of attorney, when used in selling property, need to be pretty specific.  A smudgy, old power of attorney from 20 years ago, before the owner was even in title to the property probably won't work.    Ideally, a power of attorney should refer to the specific property or transaction.  A durable power of attorney is needed if the person has, since signing it, become incapacitated (because of a physical or mental problem). 

The rise of elder abuse is a sad reality.   Escrow companies, the folks who handle the actual closing of real estate transaction  (in Oregon), and real estate attorneys, are on the look out for folks taking advantage of the elderly. In addition, in closing a real estate transaction, the escrow officer is notarizing the signature of the seller; that the seller has the mental capacity to comprehend the transaction, or that person signing (co-trustee, power of attorney etc) has the authority to sell the property.  I have seen escrow officers refuse to notarize the signature of an elderly person; feeling the seller didn't comprehend what was happening.  This happens at the very end of the transaction, when making alternative arrangements is challenging at best.

If you aren't sure how a property is owned, I can get you a copy of the vesting deed.  If we find the property is owned by a trust, you'll want to locate  a copy of the trust agreement or a certificate from the trustee so that we know whether the person claiming to be the trustee is actually the trustee.   If the property is not owned by a trust, and you have a power of attorney, I'd be glad to run it by an escrow officer and/or their legal counsel to be sure it'll do the job.

I am not an attorney and don't know all the ins and outs of this stuff. I do know, when papers are not in order, there is much frustration and delay. As with many things, a bit of preparation and prevention goes a long way.

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