Purchase of Real Estate at Discounted Price did not Constitute Financial Elder Abuse

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In an unpublished decision, the California Court of Appeal recently held that the purchase of real estate from an 85 year old man at a discounted price did not constitute elder abuse. Steinbach v. Thomas, California Court of Appeal, First Appellate District, A125293, filed 1/12/11). In his will, Herbert Thomas left his estate to his granddaughter Annalise. Thomas died in 2005 at age 85. Only a few months before his death, Thomas sold two adjoining parcels of land (his home was on one of the parcels) to Loretta Steinbach, mother of Thomas’ neighbor Camille Steinbach.

The record in the trial court showed that Camille had been extremely helpful to Thomas for several years. She had him over for Thanksgiving and Christmas, helped him run errands, and took him to lunch or dinner every week. In contrast, Thomas had much less contact with his grandaughter. He had not seen her for four years prior to his death and she last spoke to him three months before his death. Thomas had told Camille he was not close to his family.

Thomas had been in danger of losing his home. He could not afford to pay the mortgage and maintain the home and it was in terrible condition – it lacked running water and needed a new roof, stucco, dry wall and wiring. He had been unable to sell it; he wanted to sell it so that he had money to live on. He wished to keep a life estate so that he could remain on the property until he died.

Thomas asked Camille if her mother Loretta would purchase the property. Loretta initially had no desire to purchase the property, but eventually agreed to do so. She purchased the property for $315,000. An attorney prepared a purchase and sale agreement for Thomas and Loretta. The transaction closed, although the deed did not reflect the life estate for Thomas. Thomas remained on the property until his death. Annalise then filed suit against Camille and Loretta for elder abuse, claiming Thomas did not receive fair value for the property; Loretta filed a quiet title action. The two cases were consolidated.

Loretta’s appraiser valued the property at $450,00 without taking into account a life estate. The appraiser testified the life estate could reduce the value of the property by 35%. Annalise’s appraiser valued the house at $650,000; however, the appraiser had never been inside the property and likewise did not take into account the effect a life estate would have on the value of the property. After a three day trial, the trial court denied the claim for elder abuse and quieted title in Loretta.

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