Fraudulently Sold Property – Is There a Remedy?
Imagine you own a house and your friend puts it up for sale without telling you. The authorization he used was a Durable Power of Attorney naming your friend as the agent. You either voluntarily or mistakenly allowed him to take possession of it while visiting one day.
A buyer comes along and says they will purchase the house and your friend (without telling you) sells the property. The property closes and the proceeds from the sale are deposited into the friend’s account.
You find out about the sale when the automatic monthly mortgage payments deducted from your account stop being withdrawn by the mortgagee. You then find out that the property was sold. Naturally, you confront your friend who confirms the transaction. The problem takes a turn for the worse when you fail to take any action, such as contacting the police or any legal action to recover the property and the sale proceeds.
Nothing is done to recover the property. The new buyers then sell the property to another party who had no knowledge of the previous transaction. You make an attempt to reclaim the property via a lawsuit along with your rights, but sadly the new buyers will get to keep the property because of their lack of knowledge to the earlier misdeeds.
So, what went wrong here and how can it be avoided? The first thing to go wrong was giving the friend access and use of your Durable Power of Attorney. A Durable Power of Attorney creates an agency relationship where the named agent steps into your shoes and can do all the things you can do that are stated in the document. Many of those things will involve real estate transactions which is the very transaction discussed in this article.
The next thing to go wrong was the length of time before waking up to the fact that the real estate had been sold. Had there been notification to the Sherriff’s Department or a lawsuit enacted shortly after learning of the sale, the whole transaction could have been stopped and reversed.
The last thing to go wrong was the failure to put a Lis Pendens on record (assuming a lawsuit is filed) concerning the transaction and preventing another buyer from claiming a lack of notice from purchasing property involving a lawsuit.
When confronted with cases like this, the court looks to see who is the least innocent party. In this case the least innocent party is the one who has no knowledge of the fraudulent transaction. Had a Lis Pendens been recorded, then knowledge would have been present of the fraudulent transaction making the new buyers aware of the possible lawsuit and not so innocent. As a result of all these failures, the new buyers will get to keep the property as their own.
What is there to learn from this? The first thing is not to let anyone use your Durable Power of Attorney unless you need someone to act on your behalf given some specific transaction. The next thing is not to wait a lengthy amount of time before contacting someone to protect your interest in a court of law. Failure to take timely action sets in motion a perception of not caring. The last thing to learn is immediately seek a means of providing notice to the world (recording in the public records) of the potential for a lawsuit involving the fraudulent transaction. This is usually provided when a lawsuit is filed involving real estate.
Although these types of transactions and problems rarely occur involving real estate, they often occur in financial transactions. This sometimes involves making withdrawals from someone’s bank account or writing checks on an elderly person’s account using a Durable Power of Attorney as authorization. The message to all of these transactions is to make absolutely sure the agent named in your Power of Attorney is a person you can trust. Better yet, do not allow the agent to take possession of your Power of Attorney until it is absolutely necessary.
If you believe you have been the object of misuse of your assets, contact the local Sherriff’s office or the attorney of your choice and have that discussion. Just be sure not to wait to long.