Expert: Dick Dennis - 10/5/2010

Question
Hello, a family friend (beverly) is now moving out of her home and into a nursing home. She has decided to sell her house for well below the market value. Initially she didnt know anyone personally looking to purchase the home, so she agreed to sell to a stranger(Sharon). This stranger had Beverly sign a purchase agreement to sell the home to them (sharon). Upon hearing Beverly is selling the home, I decided I would purchase it to keep it in the family and also benefit from knowing Bev. A few years ago Beverly had the house put into her out of state daughters name (Marie). This being so daughter  would be the owner and have responsibilty in event Beverly couldnt make decisions or died. Also being that Beverly didnt want assets or monies in bank acct. Beverly signed the purchase/sellers agreement but her daughter has not and does not plan to. Beverly has now chosen to sell the home to me instead since I decided I would purchase it. We live in the state of MN. Beverly has owned and lived there since 1960, she is the original owner and obviously lived there until recent. Is the purchase agreement still considered binding considering Beverly isnt the owner on paper? Her daughter Sharon has not signed anything and lives out of state. How do we go about getting around or out of this "purchase agreement" or is it still legally binding even though her dauther never signed?
Thank you for your prompt reply and assistance!

Answer
Before anything is done, Dom, my suggestion would be to write a very sincere, professional letter to the "buyer" of Beverly's house and advise him of the health situation of Beverly, which pretty much substantiates the reason why the house was put in her daughter's name a few years ago.

Only the person(s) whose name is on title of a property may convey title. Period. Therefore, that purchase agreement signed by Beverly may not be valid. The reason why it was not in her name may be a problem to her and/or her daughter, depending how long ago she conveyed the title to her daughter. What she (or her daughter) needs to do is consult with a good local real estate attorney to make sure the time span is all right. The federal/state social services may be able to reach back four (possibly more) years and nullify the daughter's ownership and take the title back.

However, that may not affect you as the buyer because the federal/state agency would have to sell the property anyway in order to obtain the funds to pay for Beverly's stay in the nursing home. Now you see why it is so very important to talk with a real estate or estate attorney to make sure this all goes down well.

Another possible problem may be with Beverly's daughter. She may have an IRS tax problem if she did not collect rent all this time she was owner of the property, not knowing how she took title. Of course, it will be necessary to verify how the title was held. The attorney will do that as part of his/her service.

Yes, Dom, you have some big consulting to do to make sure this all goes down properly the way you want it. Don't try to do any of this on your own. You may wind up compounding the whole problem.

I do wish you well.

Dick Dennis
CA Broker Lic. #00349415
dixiedee13@aol.com