Employee's Home Sold Unexpectedly, Seeking Advice

[Michael in ABQ]

Our part-time employee, who works remotely, is facing a sudden and distressing situation. She and her husband have been informed they must vacate their home within the next week or two. The home belongs to her father-in-law (FIL), who lives with them in a rural area. Her husband, aged 23, has been responsible for the mortgage payments since he was 18 due to the FIL's unemployment. Despite their financial contributions and plans to eventually purchase or inherit the property, the FIL, who has early-onset dementia, sold the house without their knowledge.

The sale was orchestrated by the FIL's elder daughter from a previous marriage, who holds power of attorney. This woman, in her 40s and already a homeowner an hour away, has demanded that our employee and her husband vacate the property so she can move in with her family and place the FIL in a nursing home. Despite the years of mortgage payments and significant investments in the property, including building barns for a business, our employee and her husband are left with nothing. The market value of the property is in the mid to high six figures.

This situation raises questions about the legality and ethics of the property sale, especially given the power of attorney's role and the FIL's mental state. The exact details of the sale are unknown because New Mexico’s laws do not require disclosure of real estate transaction amounts. The couple is now in a precarious financial situation, lacking the resources to challenge this action legally and needing to secure new housing urgently.

I've got incomplete information but I'm not sure if she and her husband have any legal recourse or if this is a situation of some family members being really shitty - but not doing anything technically illegal. Appreciate any advice or insight I can pass along to her. She's a very sweet young woman who is frequently taking care of others and I hate to see her in this situation where they've just had the rug pulled out from under their lives.

[GilesMM]

Time to gather documentation and get a good lawyer.  They should not move out unless forced by a sheriff, if possible.

[reeshau]

Definitely, get a lawyer.  And don't leave until forced--all leverage is gone if they go.

That doesn't mean don't prepare to leave.  They don't want to be homeless the day the Sherriff shows up.  It may mean a storage unit and extended stay hotel or short-term rental in the back pocket.  But at least, more process = more time.

From your description,  I'm assuming they have no documentation with FIL, either as renters or some sort of land contract or rent-to-own.  I am not a lawyer, but the better their documentation, the better their chances.

I do see that New Mexico declares adverse possession after 10 years of occupancy.  How long have they lived there?

https://www.hemlane.com/resources/new-mexico-squatters-rights/

[lucenzo11]

Rough situation. Have they been paying any rent to FIL or have a rental agreement? I'm assuming not. Even if they don't have a written rental agreement or pay rent, they can probably claim that they are tenants since they've been living there a while and are protected by the state's standard landlord-tenant law. Typically in a situation where the property is sold and there isn't a set rental, it's assumed they are month to month renters and would be required 30 days formal notice to vacate. Unless there is a court order to evict, they should not leave. Was the notice to leave written or verbal? If they didn't get a firm date, then it could be interpreted as informal.

Regardless, most of the above is speculation and they need a lawyer ASAP.

[lucenzo11]

I do see that New Mexico declares adverse possession after 10 years of occupancy.  How long have they lived there?

https://www.hemlane.com/resources/new-mexico-squatters-rights/

I saw that too, but it appears this only applies if the owner is not there and the squatters are paying the taxes so I don't think this would apply.

[SunnyDays]

Won't Legal Aid provide a lawyer if they cannot afford one?

Another angle might be a civil suit to get their money back if they aren't able to stay.

[Michael in ABQ]

They did speak to an attorney they know (may not be a specialist in real estate) who basically said they have no case and the sister who bought the house could probably crush them with legal fees/delays as she has the money to pay for a lawyer and they don't. I'm not sure if an attorney would take a case like this on contingency as the best they could probably hope for is getting some percentage of the sale price since her husband was paying the mortgage for the last five years. I did recommend seeing if they could find a pro-bono attorney but that's a long shot.

[former player]

Early-onset dementia may mean that the FIL still has legal competence.  If he has legal competence then he can revoke the power of attorney, and either act for himself or give another one to someone else.  He can also still act for himself alongside the powers of the attorney even without revoking it: giving someone else power of attorney does not remove his own power to act.

He probably can't reverse the sale if it has been finalised.  But he should be able to give  the proceeds, or some of them, to your young couple.  Your young couple should be able to show how much money they've put into the property through mortgage and improvements: if they can document that and get the money transferred to them by the FIL it would be hard for the half-sister to do much about it.

If the FIL is still competent and unhappy at what is happening (mild dementia isn't necessarily the stage at which someone should be going into a home) then getting him his own lawyer is the way to go in order to put all this in train.

If FIL is under half-sister's thumb or no longer has competence things are more difficult.  I don't know the law where the young couple are: they may have a claim for some form of restitution from the proceeds of sale, but would need legal advice on that.

[neophyte]

Was the house sold to a third party or the other sister? If the sister with the POA sold the house to herself for significantly less than market value, that could potentially be a legal problem -enriching herself via elder (financial) abuse. Also the potential for Medicaid fraud if she's expecting Medicaid to foot the bill for the nursing home.

I'm not sure your employee and her husband have much footing legally - everything they've done could probably be considered rent; however the father might. They could look into contacting Adult Protective Services or similar.

[Michael in ABQ]

Early-onset dementia may mean that the FIL still has legal competence.  If he has legal competence then he can revoke the power of attorney, and either act for himself or give another one to someone else.  He can also still act for himself alongside the powers of the attorney even without revoking it: giving someone else power of attorney does not remove his own power to act.

He probably can't reverse the sale if it has been finalised.  But he should be able to give  the proceeds, or some of them, to your young couple.  Your young couple should be able to show how much money they've put into the property through mortgage and improvements: if they can document that and get the money transferred to them by the FIL it would be hard for the half-sister to do much about it.

If the FIL is still competent and unhappy at what is happening (mild dementia isn't necessarily the stage at which someone should be going into a home) then getting him his own lawyer is the way to go in order to put all this in train.

If FIL is under half-sister's thumb or no longer has competence things are more difficult.  I don't know the law where the young couple are: they may have a claim for some form of restitution from the proceeds of sale, but would need legal advice on that.

It sounds like FIL is getting confused about the situation when my employee and her husband try to talk to him about it. He eventually gets frustrated and upset. FIL knows he sold the house to his older daughter but doesn't seem to grasp the implications that it's going to make his son homeless and deprive the son of any compensation for the improvements he's made on the property and for him paying the mortgage and supporting him for the last five years.

Was the house sold to a third party or the other sister? If the sister with the POA sold the house to herself for significantly less than market value, that could potentially be a legal problem -enriching herself via elder (financial) abuse. Also the potential for Medicaid fraud if she's expecting Medicaid to foot the bill for the nursing home.

I'm not sure your employee and her husband have much footing legally - everything they've done could probably be considered rent; however the father might. They could look into contacting Adult Protective Services or similar.

Older sister with the POA sold the house from FIL to herself.

I was considering the elder abuse angle. I just sent a link to the NM Aging and Long-Term Services Department to my employee as they have a hotline to report elder abuse and exploitation.

[nereo]

So I asked my in-law who is an attorney who specializes in estate planning. With the normal “I’m not giving legal advice here” disclaimer, he said that POA is automatically a fiduciary relationship, where the POA must do what is financially in the best interest of the person they represent.
The issue is whether objectively it’s against the fathers interest. If he benefits, financially, there’s not much that can be done here.

[Michael in ABQ]

So I asked my in-law who is an attorney who specializes in estate planning. With the normal “I’m not giving legal advice here” disclaimer, he said that POA is automatically a fiduciary relationship, where the POA must do what is financially in the best interest of the person they represent.
The issue is whether objectively it’s against the fathers interest. If he benefits, financially, there’s not much that can be done here.

So, if the daughter with the POA sold it to herself at a below-market price there could definitely be an issue. But it would almost certainly have to go to court to be resolved - which my employee and her husband definitely can't afford unless they got free legal representation.

[FINate]

There are two separate issues here:

1) Your employee's housing situation and the legality of their eviction.

2) Potential elder abuse of the FIL.

(1) is a civil matter whereas (2) is a criminal matter. A POA selling an asset to themself raises a big red flag, especially if below market rate.. Who reviewed this, was it in the best interest of the FIL? I would absolutely report this to the authorities and ask that they investigate.

[plog]

My advice to you and them is to be done.

They've talked to a legal professional, you have nothing more to offer. Be done with this.

They've talked to a legal professional, they don't have the f-you money required to fund ultimately pointless legal tactics, they are young and will recover. Be done with this.

[use2betrix]

Was there a clear written/verbal agreement regarding the mortgage payments and eventual purchase/inheritance?

Without some reasonable supporting documentation, it could likely appear that they were just paying rent to live at the home. Based on housing prices skyrocketing in the last several years, there’s a good chance the mortgage they were paying was less than what a comparable rent would be.

While it is great you want to help, I would also be weary about getting to involved in employees family matters aside from some potential broad suggestions.

[Michael in ABQ]

Update with good news. Our employee let me know on Sunday that they don't have to move out immediately and have at least until July.


It looks like the FIL and older sister weren't communicating and she didn't want to move in after all. The FIL just wants to get paid for the house and make sure his daughter is taken care of (even though she's doing well financially). But he didn't really communicate that with his son - and apparently hasn't really considered the implications for him.

I'm glad things are working out to some extent. From a selfish point of view as an employer, an employee who is worried about where they're going to live next week obviously isn't going to be able to focus on work. But she and her husband are genuinely nice, hard-working people and we wish the best for them. They're both very young (22 and 23) and just don't have a lot of life experience to fall back on when situations like this arise.

Our employee and her husband and the sister are going to the bank on Wednesday to see if they can work something out. Maybe they can get a new mortgage and buy out the sister, or better yet, get assigned the existing mortgage that is several years old and probably at much better terms. It's still not clear if the house actually sold because normally that would trigger a due on sale clause in the mortgage. I told her that at a minimum they need to get something in writing going forward. A lease, a contract, something on paper that will provide them some protection while they continue trying to figure out a long-term path forward.

I appreciate all the feedback and advice.