Ask an Edina Realty Lawyer: How does a dementia diagnosis impact the sale of a home?

Homeownership can be complicated, but we also think it’s one of the most rewarding ventures out there. In our series, Ask an Edina Realty Lawyer, we are hoping to demystify some of the trickier aspects of buying, selling and owning a home.

In this edition, one of our lawyers covers the capacity for selling a home when a parent or loved one is diagnosed with Alzheimer’s or other types of dementia.

Dear Edina Realty Legal,

My mom was recently diagnosed with early-onset Alzheimer’s. She had been planning to sell her house soon. Will this affect her plans?

Edina Realty Legal:

Many people find themselves in the position of helping their parents determine how to handle their assets when diagnosed with Alzheimer’s or other types of dementia. The fact your mom was diagnosed with Alzheimer’s does not necessarily mean she can’t sell her house. It just means that legally, she must have the proper capacity.

In Minnesota and Wisconsin, a person has the legal capacity to enter into a real estate contract if they can understand to a reasonable extent the nature and effect of what they are doing. Your mom may experience varying levels of incapacity as her diagnosis progresses that affect her ability to understand and complete the sale of her house.

Can we sell her house for her?

Generally, the person who owns a house is the only person who legally has the power to sell the house. (This is true even for family members.) Your mom could identify someone to act on her behalf and sign any contracts or other documents involved in selling her house. She would do this by executing a power of attorney. A power of attorney is a legal document granting someone the power to act in certain ways, including the power to sell real property, like a house. For her power of attorney to be effective, your mom must complete and sign it of her own free will while she still has the proper capacity to do so.

“Durable” power of attorney

For the power of attorney to survive any future mental decline, the power of attorney must be made “durable” or otherwise specifically indicate that it is your mom’s intent for it to continue to be effective even if she loses capacity. How you make a power of attorney “durable” depends on the type of power of attorney put in place. For example, Minnesota’s statutory power of attorney form has a box she would need to check at the time she signs it for the power of attorney to remain in effect throughout any future incapacity.

Petition for conservatorship

If there is no power of attorney in place and your mom does not have the proper capacity to execute one, anyone who wants to sell her home would need to petition the court for conservatorship. In a conservatorship, the court appoints a person (called the “conservator” in Minnesota and the “guardian of the estate” in Wisconsin) to make financial decisions for the person subject to the conservatorship, including the power to sell their house. To be appointed as conservator for your mom, you would need to show the court that your mom lacks the proper capacity to make decisions regarding her assets and that you are an appropriate person to be appointed to make those decisions for her.

Please note that selling your mom’s house may affect her ability to qualify for different types of government assistance, like VA pensions/aid or Medicaid. These topics are outside the scope of this article and should be discussed with an experienced elder law attorney.

The Edina Realty Legal Department serves as in-house counsel for Edina Realty and does not represent private clients. This insight is not intended to provide legal advice.