Buying or selling a home – March 16, 2015
A recent court decision highlights some of the potential dangers that can be involved in selling or buying a home. In this case (our firm was not involved) an elderly widow gave a power of attorney to her adult daughter to handle the widow's affairs. Relying on the power of attorney, the daughter signed a contract to sell her mother's house. The price was $1,350,000. As with any contract, the buyer expected good and marketable title. But this condition could not be satisfied when the mother challenged the sale, revoked her power of attorney, and said that the daughter had no right to sell the house. The problem was that the mother did not want to move. The sale fell through. Eventually the home was sold to another buyer but at a price of $1 million, leaving a loss of $350,000 compared to the first price.
The rest of the story need not interest us. What is important are the following lessons:
First, it is most likely that the buyer had no way of knowing when the contract was signed there were going to be title issues. The buyer's lawyer took the right actions to protect the buyer.
Second, if you are thinking of giving a power of attorney to someone, even to a trusted adult child, you have to be very, very careful. Conversely, a lawyer should always have a direct and probing discussion with anyone wanting to give a power of attorney in order to make sure that all issues of trust and conflict are addressed. In this case maybe the power of attorney should have been limited to handling a checkbook and paying bills, and should have not included any powers with regard to selling the mother's home. But that comment is made in hindsight. There is a good chance that when the power of attorney was drafted and signed, the daughter's good-faith intention was to be in a position to take over responsibility for all of her mother's financial affairs including the power to sell the house.
Third, each of the thousands and thousands of single-family home sales that take place every year presents its own challenges. Having competent legal representation is a necessity and not an afterthought. Berman Rosenbach takes these situations very seriously and has the experience and dedication to represent you as either a buyer or seller.