Take legal advice when signing over power of attorney.
If you suspect someone who is elderly, or otherwise unable to take care of themselves, is being taken advantage of in their financial affairs, you should encourage them to get legal advice.
Here’s an example of what can happen.
In 2006, Gary Shular inherited his mother’s home on Jacobs Ave., in St. Catharines. Shular had a history of mental illness and suffered bouts of depression and lived in the house for two years with his partner. After they split up, Shular moved to an apartment on Parliament St. in Toronto and the St. Catharines property was neglected.
In Toronto, he renewed his acquaintance with an old friend, Michelle Ferraton, whom he’d known for years. She suggested that she and her common law spouse could help him fix the St. Catharines property and sell it. In exchange, she wanted half the sale price. Shular agreed and signed a sales agreement prepared by Ferraton to give her half the money.
A court later heard that Ferraton put $2,115 into the property and then convinced Shular to give her a power of attorney so that she could list and sell it. In 2008, she signed an agreement to sell it for $156,000. Shular still had to sign the closing papers. After deducting fees and expenses, Shular received $140,000. Ferraton expected to get $70,000.
Shular had a change of heart and refused to pay the $70,000, but did give Ferraton $2,115, plus $20,000 for helping him out.
Ferraton sued for the remainder. At trial in November 2012, Shular’s ex-partner testified that Shular had a history of mental illness. He also told the court Shular was vulnerable to exploitation. Shular confirmed to the court that he was very depressed in the summer of 2008.
Ferraton confirmed in court she knew Shular’s vulnerabilities which was why she had helped him with financial matters when he couldn’t earn a living or take care of himself.
By the time of the trial, Shular was on welfare, and he told court all the money from the property sale was gone.
In a decision of the Ontario Superior Court of Justice dated November 26, 2012, Judge J. Wilson decided that the contract was unconscionable and unenforceable. He said an agreement giving Ferraton 50 per cent of the sale was unfair and since she was not a real estate agent, she could not be paid for services related to selling the house. Since Shular had insisted at the trial that Ferraton be paid for her help, he upheld the total payment of $22,115.
Here is what the judge said:
“Ms. Ferraton was well aware of Mr. Shular’s emotional frailties and history, and took advantage of his passivity and listless attitude towards the property during a period of deep depression. What appears to have begun as an act of friendship, matured into a plan to profit from the situation and to take advantage of Mr. Shular’s emotional state and apathy.”
Do not give out a power of attorney or sign any other legal document over any of your property without first obtaining legal or other professional advice. There may not be enough time to get to court to fix it later.
Mark Weisleder is a Toronto real estate lawyer. Contact him at email@example.com