Father sold foreclosed house to us, now disputes agreement and threatens court.

Question

My father sold his house, which was in active foreclosure, to my husband and me. We obtained a loan for $362,000, with $300,000 going towards paying off the house and the remainder intended for renovations. My father agreed to wire $45,000 of the renovation funds to us but kept $17,000. He signed the wire transfer form at the closing. He now claims he doesn't remember this agreement and wants to take us to court to reclaim the house. The deed has been recorded, and all legal paperwork was signed by my father in the presence of a notary. We have used the renovation funds on the house, but no legal advice was sought at the time due to the familial nature of the transaction and the house being under foreclosure. We have not received any legal notification, only word of mouth from family members. What should I expect legally if he decides to take the matter to court? How long will it take for the case to proceed, and will I receive something in the mail if he is taking it to court?

James L. Arrasmith · Answer

Since the deed was recorded and your father signed all closing documents before a notary, legal ownership of the property has already passed to you and your husband. Courts place strong weight on recorded deeds and notarized signatures, so your father would have a very difficult time undoing the sale unless he could prove fraud, coercion, or incapacity at the time of signing. Simply claiming he does not remember the agreement is not likely to be enough to reclaim the property. 
 
If he does decide to file a lawsuit, you would be formally served with legal papers—usually delivered in person or by certified mail—so you will not be left in the dark. The process can take weeks or months depending on how quickly he files, how busy the court is, and how the case progresses. You will have an opportunity to respond to any complaint, and the court will consider the evidence, including the signed documents and your use of the funds for renovations. 
 
You should expect that any case would be more about the $17,000 dispute than about undoing the entire property transfer, since the latter is already legally finalized. Keep all of your closing documents, bank records, and renovation receipts organized, because they will be important if the matter goes before a judge. If a case is filed, you will know through official court notice, not just family word of mouth.

Q: Father sold foreclosed house to us, now disputes agreement and threatens court.