Do You Know Who You’re Dealing With?

More often than not, the people who come to my office are savvy, well-educated and well-prepared for their visit. It is rare that someone comes in with no idea what they want or need from their lawyer. But sometimes even the most well-informed clients finds that a basic element of their case is missing. The topic this month is knowing the party with whom you are dealing.

To put this problem in context, let’s look at a common transaction like buying a car from a private individual. When you stop and look at a car with a ‘For Sale’ sign in the windshield, you might have to dig deep to find the true owner. Maybe the car belongs to the little old lady who lives down the street, but who has gone to a nursing home or who has passed away.

How can you buy that car without her being in the transaction? If she is alive, you will need to deal with her agent under a power of attorney. If she has died, you will need to deal with the executor or administrator of her estate.

The same holds true with real estate. It continues to surprise me how often people come in with an agreement to buy property that is signed by someone who is not the true owner of the property. A son or a daughter will take it upon themselves to show the house and sign an agreement with a buyer, then accept hand money on the agreement without any legal authority whatsoever.

If the owner is not alive, we have to create an estate through the probate process, and have the court appoint an executor or an administrator who can sign the legal documents. If the owner is alive but cannot take care of the sale for health reasons, we need to be certain that the person with whom you are dealing has the proper legal authority to bind the sale. Otherwise, you might find that you have bought a property that the true owner has agreed to sell to someone else, all because you are dealing with the wrong person.

What does it take to prove that you have the authority or power to sell the house or the car, and sign the papers to finalize it? In the case of an agent for a living person, he will need to produce a written, signed, dated, witnessed and notarized power of attorney with all of the bells and whistles attached to be deemed to be a legal and effective document. Something homemade usually will not work. And if it is real estate that is being sold, the original of the power of attorney must be produced and recorded in the local county recorder’s office.

If the owner is deceased, there needs to be a formal court document known as Letters Testamentary generated by the local Register of Wills office after the presentation of the original will and a petition for probate. It is a somewhat complicated process, but if you are paying money for the purchase of the property, it is the least you can do to make sure that you are dealing with the legal representative for the owner.

If you are not the owner of the property, you cannot sell it. What if it is your mother’s house? Well, if she is alive and well, but wants you to sell her house for her, she will need to sign the paperwork herself, or give you the power to do so by appointing you as her agent with a legal power of attorney.

If it is your house with your wife, you cannot sell it unless she is alive and well and joins with you in signing the paperwork. Just because you two are married does not give one of you the right to sign papers for the other. So once again, she would have to appoint you as her agent, or sign the papers with you. If you two owned the property together with both names on the deed, and if she has died, then you have the full ownership of the property and can sell it on your own.

What if the person with whom you are dealing is the real estate agent or the attorney for the estate? Is your transaction any safer just because those folks have licenses and are experienced in the field? The short answer is ‘no.’ The real estate agent is an ‘agent,’ but only with limited powers to represent the homeowner’s interests, not to sell the property without the owner’s signature or consent. And the attorney is a ‘representative’ of the owner, but unless the attorney has a power of attorney, he cannot sign for the seller or bind them to the transaction.

In summary, it pays to know with whom you are dealing, especially in a case where you make a nice deal one day, and the true owner refuses to honor it the next day. In that situation, you have wasted your time and have no legal recourse. And remember the cardinal rule of real estate: Get It In Writing!

Christopher M. Abernethy has been practicing law in Hampton Township since 1976. He focuses on elder law, which includes wills, trusts, powers of attorney, living wills and probate matters. He also is proficient in all aspects of real estate law and business law. He is a member of the National Association of Elder Law Attorneys and the AARP Legal Services Network. He can be reached at (412) 486-6624 or by email at cabernethy@aaylaw.com.