Seller has dementia. How to avoid lawsuit?

Question

I’m in the process of purchasing a property via a wholesaler and we’ve scheduled the closing at a title company I’m familiar with. I was just made aware that the woman selling the house has “dementia” (I don’t know how severe) and since her husband has died she wants to be rid of the house. It has been unoccupied for 8 months. We’re ready to close ASAP.

Do I need some document at closing which attests to her mental capacity to make this decision? Trying to reduce my chances of getting wrapped up in a lawsuit down the line.

Thanks!

Do I need some document at closing which attests to her mental capacity to make this decision? Trying to reduce my chances of getting wrapped up in a lawsuit down the line.

Thanks!

Jay Hinrichs · Answer

this is relatively straight forward.. if the escrow officers thinks or knows there is a diminished capacity they will not close the deal they will require the seller to retain council.. or other family members etc.  At least that has always been my experience.. and if I think there is an issue I insist on the seller retaining council..  the wholesaler may freak out but screw them.. its your butt on the line .. @John Thedford

Jay Hinrichs · Answer

Caleb I would not go that far.. there is just certain protocol to follow..

Let me leave you with my Bean story.

I am negotiating to buy a 5 acre tract that I am going to bust into 30 lots or so develop it and flip it to a builder. It was off market me the buyer dealing with the seller direct no agents and I don't think I had gotten my Oregon Brokers license at that point yet..  regardless.

I explain the deal to the Hertel's  the Mr. is early 90s very nice  listened to my whole spiel .. when i was done he said Son:  I did not understand a word you said. I spent 70 years growing Beans,  Lima Beans  Pole Beans all sorts of Beans I can tell you all about Beans but real estate I have no clue..  So at that point kind of shocked I regroup and said then lets get you with your family attorney to help you..

And so he did and we closed and as it turned out he passed away before he could see how we had transformed his property to a nice little housing community..

Caleb Heimsoth · Answer

@Jay Hinrichs I understand that, and Im your case you got the family attorney involved and it worked out fine.

This is different with a wholesaler involved.  There’s no broker and I’m guessing very minimal legal representation.

John Thedford · Answer

Tricky. I wonder if the "wholesaler" knows and is screwing her over. See if you can find her relatives or attorney handling her matters.

John Barrows · Answer

I SMELL A NICE LENGTHY LAW SUIT! Oh yeah, this will be hell to deal with once the children or NEXT OF KIN get ahold of this little scheme!

It tells me the wholesaler and yourself have ZERO ethics and ZERO COMPASSION for someone who really is incapacitated! IN NO STATE can a incapacitated person sign any legal paperwork, PERIOD!

Clint Votruba · Answer

You stated:  "The wholesaler knows and told me."

I'd be pissed about being told this and hope you told the wholesaler about your concerns now that she has given you actual knowledge of a capacity issue.  Also, the timing of being told about this is suspect.  Your wholesaler may be trying to spread the risk here or set you up to share the risk, by raising the issue of dementia with you.

You stated:  "t’s a title company I know and have worked with before. The wholesaler had the seller go to the title company office to sign paperwork."

How do you know this? Did the title company tell you that they notarized her signature?  If so, and you know the title company, you could ask them about her mental capacity and inform them about your concerns.

If the title company notarized the Seller's signature, that may provide some cover for the Parties, but it won't if Seller's signatures on the transfer documents were notarized before they were delivered to the title company.

Since the wholesaler informed you of Seller's dementia, I believe you have the right to protect yourself from the potential risks and liabilities involved.

However, expect wholesaler to become uncooperative as she may not want third parties (Seller's family/attorney) to get involved in this really great deal with the Seller.

Good luck.

Jay Poires · Answer

@Jay Hinrichs

This is also my thinking regarding the title company. It’s a title company I know and have worked with before. The wholesaler had the seller go to the title company office to sign paperwork. I’ve just been mulling over ways to further protect me should there be a challenge at any point.

My plan is to flip this property. The agreed-upon purchase price is low but not out of line with recent unrenovated properties in the area.

I like the suggestion to have her represented by an attorney who will draw up some sort of document. I’m willing to pay a little more for that kind of agreement.

Jay Poires · Answer

@John Thedford

The wholesaler knows and told me. She’s handling her own transaction. As I understand it Dementia is a broad term that means many things but doesn’t mean a person isn’t capable of handling their own affairs.

The wholesaler has her go to the title company to sign paperwork.

Caleb Heimsoth · Answer

@Jay Poires I would not do this deal, talk about a legal mess.

Seller has dementia. How to avoid lawsuit?

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