If you’ve been in real estate long enough, you’ve likely encountered—or will encounter—a situation where a seller becomes incapacitated or passes away before closing. When this happens, deals can grind to a halt, forcing families into probate court and delaying sales for months.
In hindsight, it’s easy to say: “We should have put the house into a trust when we had the chance.” But how can real estate agents spot these situations early and help their clients avoid costly delays?
The Biggest Legal Roadblocks in Elderly Home Sales
Sellers who are elderly or in poor health present unique legal challenges. If they lose capacity before signing closing documents—or pass away without the right legal planning—their home sale could face significant delays.
The most common issues include:
- Lack of a valid Power of Attorney (POA), preventing family members from signing on their behalf.
- The home is not in a trust, meaning it must go through probate before it can be sold.
- Title issues arise after the seller’s death, complicating or stalling the transaction.
Power of Attorney: Why It’s Not Always Enough
A Power of Attorney (POA) allows an agent—usually a family member—to handle financial and legal matters, including selling real estate, on behalf of the homeowner. But here’s where real estate agents run into trouble:
- Not all POAs authorize real estate transactions. If a POA does not explicitly give the agent authority to sell property, the title company will likely reject it, and the transaction cannot move forward.
- Title companies and lenders have strict requirements. Some POAs are too old or do not meet legal standards, meaning they won’t be accepted at closing.
- If a homeowner is already incapacitated, it’s too late to sign a POA. In that case, the family must petition the court for a guardianship, which can take months and lead to significant delays.
Best Practice: If a seller is elderly, real estate agents should ask whether they have a Power of Attorney that explicitly allows real estate transactions. If not, they should be encouraged to speak with an attorney before they need one.
Why a Trust is the Best Way to Avoid Probate Delays
A revocable trust is one of the best ways for elderly homeowners to ensure their home can be sold smoothly, even if they become incapacitated or pass away.
Here’s why trusts work so well:
- If the homeowner becomes incapacitated, the successor trustee can step in immediately to manage and sell the property.
- If the homeowner passes away, the home is not stuck in probate—allowing for a faster sale.
- No court involvement is needed, which means fewer delays and complications.
Many homeowners assume that having a will is enough to keep the sale moving. It’s not. A will still requires probate, which can take months or even years to settle. A trust completely bypasses probate, allowing for a seamless transfer of ownership without court involvement.
The Pocket Deed Strategy: A Simple Way to Hedge Against Delays
If a homeowner wants to use a trust but hasn’t officially transferred the home into it yet, a pocket deed can serve as a simple backup plan.
A pocket deed is a signed deed transferring the home into the trust, but it is not recorded immediately. Instead, it is kept in a secure place and can be recorded if needed—such as if the homeowner becomes incapacitated or passes away.
Benefits of a Pocket Deed:
- No upfront recording fees—it’s only recorded when necessary.
- Avoids probate delays in case of unexpected health issues.
- Ensures a smooth transition to the successor trustee if needed.
While a pocket deed is not a substitute for properly funding a trust, it’s a valuable safety net that can keep a home sale on track.
How Real Estate Agents Can Protect Their Clients (and Their Deals)
Real estate professionals are often on the front lines of spotting potential issues before they turn into major delays. Here are a few key warning signs that a home sale could be at risk:
- The seller is struggling with paperwork or decision-making, which may indicate cognitive decline.
- Family members are involved, but no one has legal authority to sign, suggesting a lack of a POA or trust.
- The seller has passed away, and the home isn’t in a trust, meaning it is now a probate sale.
Final Thoughts: Helping Clients Take Proactive Steps
If you’re a real estate agent working with elderly homeowners, identifying these issues early can help prevent months of delays and frustration. By encouraging clients to put the right legal protections in place—such as a valid Power of Attorney, a properly funded trust, or a pocket deed—you can ensure a smoother, more predictable sale.
Have questions about real estate transactions involving elderly homeowners? Reach out today to discuss how to protect your clients and avoid unnecessary delays.
This article is for informational purposes only and is not a substitute for legal advice from a qualified attorney. Estate planning and real estate transactions involve complex legal considerations that vary by individual circumstances. Only by speaking directly with one of our attorneys can we assess your specific situation and provide tailored legal guidance. If you need legal assistance, contact our office today.
