Selling the Family Home when Mum or Dad has Alzheimer’s

It’s the family home. Mum, who has Alzheimer’s, lives there on her own but needs to move to a nursing home and the family home needs to be sold to pay for the fees. What could possibly go wrong?

Often adult children dealing with this situation will realise in advance that advice needs to be sought from an experienced elder law lawyer. Usually that advice will be that, in the absence of a valid enduring power of attorney in relation to property, an application should be made to the Family Court under the Protection of Personal and Property Rights Act 1988 to have one or more of the children appointed as a property manager of their mother’s property. For more information on the appointment of a property manager under the Protection of Personal and Property Rights Act click here.

However, not uncommonly in this situation, the focus will be on getting the house ready for sale, moving Mum to the retirement village, assisting with open homes and all the numerous related tasks that go with such a big change. That can mean that it only begins to dawn on the adult children that there might be a problem when it comes to the signing of the sale and purchase agreement or the LINZ transfer authority on the eve of the auction.

A couple of examples illustrate the problems (and solutions) which can arise.

Example 1 – Family home owned by family trust of which the mother and her adult children are trustees. The trust deed does not provide for the removal of a trustee for incapacity. The oldest daughter is the property attorney of their mother’s property under an enduring power of attorney.

You might reasonably think here that this one’s in the bag. The oldest daughter can sign the agreement for sale and purchase and the LINZ transfer authority under the enduring power of attorney. Right? Wrong.

The problem here is that the powers the subject of a property EPOA under the Protection of Personal and Property Rights Act do not extend to allowing the attorney to exercise powers held by the donor of the EPOA as trustee.

Instead, what is called for here is an urgent without notice application to the High Court under the Trustee Act for the removal of the mother as trustee and vesting of the trust property in the continuing trustees.

Example 2 – Family home owned by mother but oldest daughter holds a power of attorney in relation to mother’s property. But (and it’s a big BUT) the power of attorney is not an enduring power of attorney and does not comply with the form prescribed in the Protection of Personal and Property Rights Act.

In this situation the best course of action is to apply to the Family Court for an order for the appointment of a property manager under the Protection of Personal and Property Rights Act.

Fortunately, the PPPR Act allows the Family Court to make urgent interim orders for the appointment of an interim property manager where:

• an application for a property order has been or is to be made
• there are reasonable grounds for believing the Court has jurisdiction; and
• urgent provision to protect the property is necessary.

In this case, it would be important to waste no time in engaging an experienced elder law lawyer to prepare the paperwork for the application which would need to include medical reports from the file held by Mental Health Service for Older People and obtaining the written consent of the other adult children so that an application could be filed with the Court at short notice.