Q: An elderly lady owns some land in our area and has offered to lease it to me at what I consider favourable terms. However, I have been told by friends that one has to be careful because such leases can be challenged. What are the rules in this kind of situation?
A: As a general rule there is nothing that prevents someone from giving you a good deal and you accepting it. Nor is there any reason an elderly person can’t give you a good deal.
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The only time questions might arise is if you used fraud, deceit, took clear advantage of the person to get a good deal or it was clear to you the person was mentally incapable of entering into an agreement.
In law, the assumption is that a person is capable and competent to handle her business affairs. The onus of showing otherwise is on the challenger. The challenge needs to be made in court.
Who can challenge such a deal? It could be challenged by the person who gave the good deal because she has changed her mind. Alternatively, if a guardian or attorney is later appointed to handle the affairs of the individual, the guardian could challenge the deal. An agreement such as a lease continues after death.
The executor steps into the deceased’s place to handle her affairs. He or she could also challenge the deal.
In such a challenge, the fact that the agreement was a good deal would not automatically invalidate the lease. In order for the lease to be invalidated, the individual(s) challenging it would have to show that you engaged in fraud, deceit or in some way took clear advantage of the owner resulting in a deal that was unconscionable and should be set aside.
So if you got the owner drunk or threatened physical violence, the lease would be set aside. If she asked you what current arrangements were in the area, and you gave knowingly false information, your actions would probably be sufficient to invalidate the lease. So too, if you had questions about her mental capacity, there is a good chance the lease would be struck down.
There are several things you should do to protect yourself. Are you satisfied that the lady is mentally alert and understands the nature of the lease and the offer she is making? Is she aware that she is offering you a good deal and what the going leasing rate is in the area? If she seems unclear about going rates, it might be a good idea to outline in general terms your knowledge about them. Ask yourself if there is a reason that would justify her giving you a good deal. Perhaps, she is looking for future favours such as drives to the doctor’s office. Maybe she is concerned about taxes and is trying to reduce income.
A good course of action would be to ask her to get independent advice from her lawyer. It would also be a good idea to have a lawyer prepare the lease. If she refuses, at minimum have an independent witness to the discussion.
Finally, no matter what steps you take, as citizens we have the right to go to court to challenge agreements we have signed or agreements signed by someone whose affairs we have the legal right to handle.
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
