Senior Deed Transfers: Is Capacity In Question?

When an older adult transfers property, sometimes questions come up about whether the deed holder had legal capacity to transfer it. Did the person grasp the meaning of the transfer? Was the transfer voluntary? A court could undo a problematic deed transfer in a quiet title action.

But deeds are presumed valid. If they’re properly signed, witnessed, delivered, and recorded with the county, they’re good. Getting a deed set aside is no easy feat.   

Today, with those basics laid out, we look briefly at whether a deed can be valid if the deed holder lacked mental capacity when signing it away.

When Incapacity Could Come Up as a Question

An older adult signs over a deed to a younger recipient, who later wants to sell or take a loan out against the home. This puts a title search in motion. To insure the title, the title company wants proof of the elder’s cognitive capacity at the time of the past deed conveyance.

Questions could involve a range of scenarios, like these:

1. The transferor had a degree of cognitive impairment at the time of transfer — but understood the act.

• The transferor was fine at the time of transfer, but now suffers from dementia.

• The transferor was under a temporary incapacity at the time of transfer. The deed holder didn’t understand the consequences of signing, but nevertheless signed the deed over.

• The transferor was being pressed to sign by someone they trusted, and gave into the pressure. Undue influence succeeded — because the deed holder lacked legal capacity.

In any of these situations, the deed’s validity could come up as an issue. The title company may fear that another person could challenge it. In the third and fourth scenarios above, the challenge would have legs.

Hold on a Minute. The Deed Was Notarized!

Yes, a notary checked the signer’s ID and witnessed the transfer. But unless it was blatantly obvious that the signer didn’t grasp the meaning of signing, or was visibly under pressure to sign, a notary will perform the notarial act. A notarization doesn’t prove the signer had legal capacity. If there was a closing at an office when the deed was transferred, the closing should have been discontinued in response to signs of incapacity or undue influence.

But once that transfer is done, it’s done. Now, no one can say the signer lacked legal capacity unless and until a court makes a finding of incapacity. To make that finding, the court would need to see medical evidence.

And sometimes, too much time has passed to challenge the transfer. In states where incapacity makes a deed voidable, someone must make the court challenge within a certain span of time.

After that point, key witnesses might be gone. Memories might have faded. Again, remember this. A deed transfer is presumed valid when the transferor went through all the procedural steps, including notarization and recording.  

What You Must Know Before Challenging a Deed Transfer

Through this column, we provide general information only, not financial or legal advice. You have not entered into any attorney-client relationship by reading this material. So, now that you have a basic orientation with the issues, what’s your first step to challenge a deed? Setting up a consultation with an experienced lawyer in the same state as the home at issue.

Take note: It’s hard to challenge a procedurally correct property deed. It also takes a serious time commitment. It costs money to work with the court system. It’s costly and complicated to have people requesting and reviewing medical records. It’s a complex task to question people about the circumstances surrounding a transfer, and to bring in expert witnesses.

For a valuable property that seems to have been wrongly transferred, the quest could make sense. A lawyer with experience in deed challenges could help you explore the likelihood of winning in court.   

Word to Wise Seniors: Advance Planning Has Its Benefits

Older adults should have someone ready to protect their interests when they become legally incompetent. Part of estate planning is delegating the power of attorney to do exactly that.

There are multiple advantages to hiring a qualified estate planning lawyer. Doing so could spare the upcoming generation from questions and disputes after a senior transfers a home. Transferring property with the benefit of expertise can spare relatives from large tax obligations in some cases, too.