Use a Lawyer Review Clause to Protect Your Buyer with Dementia

Question:

Representing the Seller in a sale. Drafting offer for Buyers at their instruction with customer status. It’s come to light that one of the Buyers has early stage dementia.

Other Buyer is Buyer 2’s family member, Buyer 2’s intended caretaker, and licensed, knowledgeable health care worker. Believes Buyer 2 has the capacity to contract and has stated as much. A Power of Attorney (POA) has been drafted but not executed.

I have included legal advice condition for seller to get outside opinion on potential risks of entering into this contract. Have I adequately protected the seller? Could the contract be at risk should the buyer remove conditions and not complete?

Answer:

The POA in this scenario does not exist.

The situation is essentially the same as a Buyer potentially not having sufficient mental capacity to enter into a contract.

Coercion is a risk, but, that’s far more likely for a Seller than a Buyer.

Buyer #1 would still have entered the contract and the contract would still be binding upon them anyways.

In your case, acting for the Seller, does Buyer #1 have sufficient funds to complete the transaction “on their own”.

Your proposal to include a condition permitting Lawyer Review is a good one. Lawyer review should be expanded to include both “legal terms and business terms”.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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