Dear Wigged,
Unfortunately, this type of issue is not uncommon after a death,
particularly of an elderly person.
Although I am an attorney in Michigan, I am not licensed to practice
law in any other jurisdiction. Please consider the following to be my
personal opinion, based upon my knowledge of Michigan law, which may
not apply in your state. You should definitely consider seeing an
attorney that specializes in estates or real property law.
In Michigan, for example, the standard was set forth in a case heard
before the Michigan Supreme Court in 1955: Potter vs. Chamberlin, 344
Mich 399; 73 N.W.2d 844 (Mich. 1955), where the Court held:
1. A grantee has the right to dispose of her property as she sees fit,
assuming that she is competent to do so and is not subjected to undue
influences. The primary question is whether she has sufficient mental
capacity to understand the nature of the transactions respecting her
property, to know the value and extent of such property, to reach a
logical conclusion as to how she wishes to dispose of it, and to keep
such facts in mind for a sufficient length of time to permit the
necessary planning and effectuating of her wishes without prompting
and interference from others.
2. On the issue of mental competency the burden of proof is on the
party asserting mental incompetency.
3. Mere opportunity to exert undue influence is not sufficient.
Headnotes to Potter v. Chamberlin.
The relatives in the Potter case were alleging that a fiduciary
relationship existed between the dead person and the buyer, which
would have the effect of permitting (or requiring) a high degree of
scrutiny to the transaction. The Court found that there was not a
fiduciary duty, and further stated:
"The record in the case at bar contains no proof that Mrs. Drake
relied on the advice and judgment of [buyers] in business matters.
Apparently she had confidence in her own judgment and in her ability
to handle her affairs. The transactions in question were made in such
form as to insure that she would retain sufficient property interests
to render certain her support and maintenance as long as she might
live. Unquestionably she found [buyers]congenial and she appreciated
the services that they furnished to her, but such situation did not
render the relationship a fiduciary one. In consequence we are not
confronted with the rebuttable presumption (see my note below) arising
in cases where such relationship is affirmatively shown. The facts in
this respect are not analogous to those involved in [another Michigan
case]. The fact that the parties [the decedent and the buyer] in this
case occupied the same house for a period of approximately 2 years and
9 months does not justify an inference that there was a fiduciary
relationship, or that there was undue influence exerted against Mrs.
Drake. As before stated, mere opportunity is not sufficient." Potter
v. Chamberlin, 344 Mich. at 406-407.
Competency can only be determined by the testimony of those that were
in a position know the seller. Perhaps that could include doctors and
other professionals, but it could also include plain ole folk. The
court would hear the testimony and decide if the relatives (who bear
the burden of persuading the court) can convice the court. In the case
above, it is the RELATIVES, not you, who carry the burden of
persuasion.
The "rebuttable presumption" that the court mentioned in their opinion
would be where you, the buyer, are assumed to owe a duty to the
seller, because of a special (fiduciary) relationship of trust, and
that "presumption" holds unless you destroy it with your evidence.
Remember, though, the Court did NOT find such a special duty to exist
here, and based upon the facts that you mention in your question,
would probably not be found to exist in your case.
The fact that you have an appraisal to support the purchase price is
powerful evidence of an expert opinion fully informed of the facts
existing at the time fo the sale. Assuming that the appraisal was done
as an "arms length" transaction, you should be in great shape.
But remember, anyone that can pay a filing fee at the court can bring
a law suit - and challenge the sale. If you have any reason to believe
that the relatives have retained an attorney, you should definitely
have your attorney consider furnishing the other side with a copy of
the appraisal and perhaps an affidavit (statement under oath) that the
appraiser was retained at arms-length and is unrelated.
I would definitely run this question by your legal counsel, but should
you consider getting an updated appraisal so as to "mark the property
to market" now as of the time of the controversy so that you can
(hopefully) support the appraisal from two years ago. Check with
counsel.
Good Luck. And please, if you would like ANY clarification, please
ask and I will chime back in.
I hope I was helpful.
Tom |
