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How to Protect Yourself--Don't Take Advantage of Granny

by John Merchant   

Dealing with seniors is a whole 'nother deal, and those of you doing so should be conscious of some real danger areas that might hurt YOU, not Granny! First, being really real and approaching "seniorhood" myself, and being all too aware that I'm basically the same sorry sinner I was at 25, 45..., I've got to level with you and startle you with the revelation that people don't get any better as they get older. Older, yes, but better, no.

Shocking isn't it?

Just because she looks like a kindly old lady, with a sweet face and pretty hair, don't you trust her anymore than you would anybody else--or you may live to regret it. You ever see "Arsenic and Old Lace"?

Having bought and sold real estate for a long time now, I've seen some ugly situations develop because some kindly looking, older citizen put it to the other guy. Happens all the time.

An example: Granny's 85-years-old and obviously sharp as a tack. She says she likes you, so you and she make a deal that you agree to buy her house, which has (YOU know, but think SHE doesn't!) a real market value of probably $250,000.

And Granny says because she likes enterprising young people like you, she's going to give you a special deal (and she does--just keep reading) and let you buy it for only $100,000. She tells you she needs the money to move to a nursing home.

She'll sign a deed over to you today, and it's free and clear (you've checked with the title company and found no liens or mortgages), so if you'll just come up with a money order for $10,000 today, and give her a 30-year note at 2% interest for the balance, it's all yours.

So you rush over to Friendly Fred, your banker buddy, and beg him for the $10k, take the $10k and the deed back over to Granny. She signs, you give her the $10k and your note, and you're set...you think! A few days later you get a certified letter from her attorney telling you that Granny has complained that SHE'S been taken advantage of by YOU.

And not only is Granny gonna sue you, but the lawyer's also filing a Lis Pendens in Deed Records, so you're not going to be able to do diddly with the property until the matter's thoroughly investigated and then litigated, and you're out the $10k for the duration--maybe forever.

Seems Granny and her kids have told the lawyer that Granny is really not competent, mentally, kind of sliding in and out of reality, and no deal made by Granny's really going to stand up under scrutiny. Now, what might you have done in this deal to protect yourself from that wolf in Granny's disguise?

Well, for starters, ANYTIME you're dealing with somebody who's over 70, it would probably be a good idea for you to have the deal looked at by your lawyer, and make sure the other party is given a document by you telling her that you've recommended that Granny have HER lawyer look at the deal.

Also if you know of any adult kids or heirs of Granny, it would be my suggestion that you have them sign off on it too. You really don't want them interfering in your deal? Well, would you rather wait until you're out the $10,000? Maybe for a few years?

Put yourself in the kids' shoes. Even if Granny doesn't complain, don't you think those kids are going to know the old lady has just succeeded in doing them out of lots of money? So won't they probably throw some wrench into the machinery even if Granny doesn't? Wouldn't you be a little upset if YOUR mom decided to start giving away your inheritance?

At the very least, take along your own, known-to-be experienced notary public (Granny's signature has to be notarized anyway, to make the deed recordable) and prompt the notary to engage Granny in some little bit of preliminary conversation so as to establish in the notary's mind that Granny is no dummy, and is very competent to do what she's doing.

(No, no, not any notary who works for you, but an independent, strictly neutral one who has no interest in the deal.)

You might just take along a friend as a dependable witness-to-be, in case he or she is needed as a court witness for you later. Ask that person to make some notes about the conversation and your meeting with Granny so he or she can later testify if needed.

If it's really going to be a BIG profitable deal for you, would it hurt you to talk, with Granny's written consent, to her doctor? And to get a written note from that physician that Granny's A-OK, mentally?

After all, if her doctor says she's totally competent, is Granny (or are her kids?) going to be willing, later in court, to say her OWN doctor is a liar? Or didn't know what the doctor was doing?

Even if Granny has no doctor, you could arrange for an exam by a doctor of YOUR choice, at your expense, so you'd be a lot better off than if you hadn't done it--no matter what the doctor's report to you, you'll be better off knowing about it, before you pay your $10k to Granny.

Do you think any insurance company is going to pay anybody anything for any claimed injury, condition, etc., without having THEIR own doctor examine the person? If you say no, maybe it's YOU who needs to be examined!

Second scenario: Granny is perfectly happy with your transaction. The deal closes, you get your deed from Granny, you pay your money and think you'll live happily ever after.

Unfortunately, Granny doesn't. She dies a couple of years later and the kids, who may not have even been friendly with the old lady, and maybe haven't even spoken to her in years, are suddenly seriously grieving her loss and checking everything over with a fine tooth comb, turning everything into money for themselves.

They start looking into what Granny has done with her property, and when they discover YOUR deal, they go ballistic. What? Granny did what? Why their beloved old mom was cheated, skinned, and taken advantage of by YOU! You scoundrel, you!

Imagine the fun you'll have on the witness stand in the lawsuit they bring against you justifying what you've done, telling the judge and jury how wise Granny was selling to you for 40 cents on the dollar. And how you flipped that property within the week for $150,000 profit.

OK, then. Back to the drawing board. What could you have done to protect yourself against this kind of fun? To start with, you need to realize Granny just might die soon after your deal, and it's going to be looked at by lots of avaricious folks, and you might find yourself on the chopping block.

So would it hurt you to have Granny call and arrange for HER lawyer to draft a new Last Will and Testament? And that new Last Will sets out what Granny owns, and the fact that she's sold one of her properties to you and that's why that property isn't going to be inherited by the kids.

Too much trouble for you? Too expensive for you--with your $150,000 profit? Even if her new Will cost her, on the high side, normally $2,500 (of your money) you really would prefer the other options here?

One thing: You hand Granny the cash and have HER hire and pay the lawyer. Not you, or the lawyer's really got a conflict of interest and not something you'd enjoy telling the judge and jury about. Or that the lawyer would enjoy discussing with his or her Bar Association Grievance Committee.

Oh, about any lawyer had done a Last Will and Testament--virtually any Will being done by a lawyer is going to have witnesses and a notary's acknowledgment, and no sane lawyer is going to permit his or her client to execute such an instrument if the client isn't clearly sane and competent and demonstrates to the lawyer that she clearly understands her assets, her relationship to her kids, etc.

The lawyer will be acutely conscious of this and you should too: The lawyer can't represent you and her. So it's going to have to be one who doesn't represent you or hasn't in the past, so there's no conflict of interest there.

The moral of all this depressing discussion should be clear. Face reality now or prepare to enjoy the fun you might just have in store in the future, should you not do so.

 
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