Protecting a Senior’s Real Estate Assets
I recently had a client who came to me complaining about an investment home that their 74-year-old father owned. He had sold the property to a real estate agent’s son for a substantially below-market value. Considering the neighborhood, the overall condition of the home and the current and active market conditions, the low sales price was concerning. When I called the agent to inquire further, she said that they had negotiated a fair price and that my client’s father “knew what he was doing”.
Upon further investigation, I learned that my client’s dad had a serious back injury just months before the transaction closed and was pretty much “homebound”, recuperating. He did not have a care-giver and had no family members living nearby. He also relied on the monthly rental income of the home in question. Finally, I learned that the buyer, besides being the real estate agent’s son, was a landscape contractor for the rental property. Soon after the dad’s surgery, the buyer had become a frequent visitor to the father’s residence. Because of the circumstances surrounding the real estate transaction, I began to suspect that my client’s father was the victim of undue influence or financial fraud.
According to a recent survey conducted by the American Bankers Association Foundation, Americans over the age of 50 account for 70% of all bank deposits, and 20% are estimated to be targeted by financial fraudsters. (ABA Banking Journal, November 1, 2017). Both the AARP and the Better Business Bureau say that seniors are more vulnerable to financial scams because of their physical frailty, isolation, or poor mental recall. In incidents where real estate is involved (often the most valuable asset that seniors own), the results are most costly and disastrous.
Here are five things that seniors and their families can do to protect their real estate and property interests from financial fraudsters.
1 .Tax Statements and Other Bills
Regularly review all of your real estate tax statements and other documents. While a tax statement does not definitively document property ownership, it will usually name the “owner” of record. So twice a year when tax statements are issued, verify the name of who is listed as owner. Other items to monitor in the mail: bank statements, unpaid bills, utility shut-off notices, or worse, eviction notices.
2. Create a Trust
Put the real estate in a trust on a senior’s behalf. Unscrupulous, high-pressure real estate sales agents or investors often try to weasel a power of attorney, will, or other legal document from unsuspecting seniors. These documents give them access to a senior’s property. They get seniors to sign these documents through deception or intimidation. But when a property is placed in a trust for a senior, it is the trustee who must endorse the sales or other legal documents for a real estate transaction to be legally binding. This arrangement would have served my client’s father well if he had a trust and at the very least slowed down the transaction.
3. Open and Review Mail
Fraudsters can tap into equity lines long thought to be dormant by a senior home owner. Caregivers or family members should monitor checking accounts and be alert to large deposits or withdrawals in a senior’s bank account. Always encourage using checks or credit cards instead of cash. This leaves a paper trail. Most importantly, verify signatures on checks or other documents and report any unauthorized or suspicious signatures.
4. Use Monitoring Services
Consider using real estate monitoring and credit monitoring services. There are services that monitor property transfers and track unauthorized liens in the county’s public records. Credit-monitoring services such a Lifelock are also effective to protect against credit card forgeries or other accounts opened fraudulently. With the Equifax hacking, it is a good time to pull your senior’s credit report to ensure they are not victims of identity fraud.
5. Encourage Communication
Collaborate with a senior’s caregiver, family members and financial and legal advisors. Fraudsters take advantage of isolated seniors who may not have a caregiver or family member living nearby. Encouraging good communication among a senior’s family members and / or advisors fosters a layer of protection against fraudsters. The more professionals who work on behalf of a senior, the better.
For more information on this topic, see the Better Business Bureau, or the Federal Bureau of Investigation: see Elder Financial Fraud.
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