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My niece herself purchased and payed for a house, and signed the ownership to her husband. Recent problems have risen, he husband is not mentally stable he has a history of mental health issues and has been in a mental hospital before put the house up for sale without consolation with his wife which will leave her and her kids without a home. If she declares him to a hospital as mentally ill giving his relapse and hishistory of it, what will be of the house? Will it be back under her name since he is unstable and incapable of good judgement or handling real estate? And what would it be in the case of a divorce?

Asked on September 9, 2017 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

You can block the sale if it has not occured if he is found legally mentally incompetent--that is, it's not enough for him to a hospitalized, but a court has to, based on medical evidence, find him incompetent and appoint someone his legal guardian. We must stress that because this is a legal issue, not a medical one (though based on medical facts or evidence), only the court can declare him incompetent for this purpose. Mentally incompetent persons cannot enter into contracts.
A just- or recently completed sale can also likely be voided (undone) IF *all* the money paid for the house can returned to the buyer and/or the lender. Voiding a sale requres putting both parties back in the same position they occupied pre-transaction; if the buyer cannot be restored--if, for example, your neice's husband spent, lost, hid, gambled away, etc. the money so that it cannot be returned, the buyer's could keep the house.
Note that in addition to the above, if the buyers moved in or are incurring costs to move it, your neice and her husband might have to also repay them their moving, etc. expenses.
At some point, if your neice waited too long post-sale to act, a court would likely decline to void the sale based on "equitable" factors--i.e. on not being unfair to the innocent buyer, who has uprooted his/her/their life(ves) in good faith. So if a family has relocated and would have no where to go if the house were taken, their kids have started school, etc. a court might feel that it would be wrong to void the sale and make your neice bear the consequences of having delayed acting.
Therefore, time is of the essence: you neice needs to consult with a family law attorney right away about having her husband declared incompetent, if the medical evidence supports that; and also about a possible divorce and what would happen.
In terms of a divorce, while all cases are different, if he is mentally unstable, she will likely get custody of the children and he will have to pay child support (which would be moot if he is hospitalized and not working). In terms of alimony (spousal support) and distribution of assets, that depends on their respective incomes, earning potential, contributions, etc.--it's very fact or detail based, and needs to be discussed with a lawyer.

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