Legal Question in Real Estate Law in Minnesota
Sold house that's in life estate
My mother-in-law, recently widowed, wanted to sell her house and move into an apartment. Her 4 children own the house and she has life estate. She did not understand fully what life estate meant and listed her house with a real estate agency. She had an interested party, and ended up signing a purchase agreement for an amount way lower than the house is valued, plus agreed to pay the closing costs. She realized after what a mistake she made, and the realtor did not realize it was in life estate. The party will not back out of the deal, even though the lawyer sent them a letter stating that all they have purchased is ''life estate''. Once my mother-in-law passes on it will go back to the 4 kids. These people are trying to get financing for this, and a morgage company is calling my mother-in-law to come look at the house. The morgage company has also recieved a letter from the lawyer stating the house is in life estate. Will she be able to get out of this without being sued by the party? They only put down $200 and the realtor has that. It seems they think they should be compensated for something, when not even a week had gone by from signing to wanting out of the agreement. Can she simply say ''I'm not selling!''.
2 Answers from Attorneys
Re: Sold house that's in life estate
A purchase agreement is a contract and is subject to all the rules that make up the law of contracts, which is massive. There is a very long list of reasons why a person either doesn't have to or may not have to perform a contract, and one of them is "mutual mistake."
You can have "mutual mistake" when both parties to the contract make a mistake as to the subject matter of the contract which goes so much to the heart of the purpose of the contract that a court will consider the contract to be void. Your mother-in-law probably has this defense.
Assuming her lawyer knows what he or she is doing, this should not be all that serious of a problem.
Re: Sold house that's in life estate
There are 2 contracts to consider: the one with the potential buyer (purchase agreement) and the one with the real estate broker (listing agreement). I'm not sure who the lawyer you refer to is representing.
Your mother-in-law needs the assistance of an attorney to negotiate the cancellation of both contracts. Also, a recordable cancellation of the purchase agreement may be needed because technically the purchase agreement is a cloud on title.
Whether this will be easy or not depends on the parties, but the sooner you act the better.
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