Dementia and Contracts: Legal Ramifications

5 Replies

Typical scenario. Old man original owner of a house in the shambles. Trash and rat infested backyard. Complaints from neighbors. Weeds growing. Bare walls with exposed studs. Never upgraded since 1972. $7k property tax liens. He can’t take care of the property much less himself. He’s interested in selling to me. But his mental health is at issue. He has poor memory and health. If he signs a contract but it’s found later that he has dementia or other cognitive issues what are the legal ramifications? I’m assuming it would void the contract.

@Gary F.

Someone would have to be in place to make legal decisions.

I closed on a deal that took 5 months because one of the parents had Alzheimer's. Even though the children had a power of attorney, issues kept coming up.

It can be done, but if someone doesn't already have something setup as a caregiver with legal authority, you might have an uphill battle.

Hi Christopher

Thanks for the reply. Yes I was thinking that there should be someone to help represent him. It’s only his name on the property. He doesn’t have family in the area and may be in bad terms with the family he does have.

On public records it’s only his name on the property. But is it correct that the property could be in a trust and just not recorded with the County? Because if it’s in trust then he can’t sign any papers unless he’s the trustee.

Any other advice appreciated

Old doesnt mean dementia . If so if I sold you my house last year , and it triples in value and I regret selling it , I would just claim dementia and sue you . 

In the event that he has not appointed a attorney of health and finance the only way to insure the contract is legal is to involve his lawyer and a qualified doctor to verify his competence. The seller would have to initiate this action.

If his doctor determines he is not competent then the family would need to take over and this could be a long drawn out process. I would walk away from the deal.

Same goes if he refuses to work with his doctor and lawyer to confirm his competence. Walk away and let the family know they can contact you in the future if they get the situation resolved.

Family members can become extreamly greedy when money is involved so if you want to avoid a legal battle you must have documentation proving he is compitant if ther eis any doubt at all.

I have been involved in a similar situation and even after the seller was confirmed as competent family members hired lawyers to legally challenge his competency and right to sell. It will not be the seller that is the problem it will be greedy relatives.

@thomas S. Yes that’s what I was wondering about. His family that might come out from his past.

If I do deal with him I’ll do a title report and have papers drawn up with a real estate attorney. I would think then it’s all legal and done correctly. I’ll have to consult with an attorney on this

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