Failure of Consideration and Promises to “Care for Grandma for the Rest of Her Life”

This semester I’m teaching Contracts, which always provides interesting opportunites to introduce “Elder Law” concerns in a traditional course.

This week I offered a not-so-hypothetical fact pattern, where Grandmother deeds house to Grandchild, in exchange for Grandchild’s “promise to care for Grandma for the rest of her life.”  Whenever I use this hypo, I pick one of a number of reasons the agreement does not work out as planned, such as the individuals don’t get along with each other, grandchild gets pregnant or ill, etc.  This week’s reason was “Grandma needs more specialized care” but cannot afford it because she’s given away her primary resource. Grandchild doesn’t want to sell the house, now that it is “hers,” and she doesn’t want to take out a mortgage. 

I ask the students to brainstorm Grandmother’s options.  Almost always, someone suggests Medicaid, and we talk about whether Medicaid will provide adequate assistance and whether there are potential barriers to eligibility for public benefits, such as the five-year look back period. 

Students sometimes suggest Grandmother is subject to “undue influence,” which if proven would be grounds for potential rescission.  Good job!  Except that I am usually careful in my hypo not to make Grandchild overtly manipulative.  And in truth, many of these arrangements begin more because of the desires of the aging individual, than because of any greed on the part of the younger person. We also explore “incapacity” and “duress” as possible grounds for rescission.

This week, students also suggested “failure of consideration” as grounds for rescission.  There is an interesting line of cases, perhaps a hybrid of Property and Contract law, that treats “support deeds” as a specific analysis, potentially justifying relief. Examples include:

• Gilbert v. Rainey, 71 SW. 3d 66 (Ark. Ct. App. 2002), permitting mother to rescind deed for failure of consideration, and admitting mother’s parol evidence to show daughter promised life care in exchange for the conveyance of the home, to show that conveyance was not a completed gift;
• Frasher v. Frasher, 249 S.E. 2d 513 (W.Va. 1978), granting cancellation of deed from grandparents to grandchildren, on the grounds that where discord arises between the parties to a “support deed” between an aged grantor and a younger family member, the property should be restored “if it can be done without injustice” to the younger family member. 

After class was over, some of my students stopped by to chat, offering variations on the hypothetical, sometimes from examples within their own extended families.  In both of the sample cases above, the court attaches special meaning to the concept of “support deeds” going from older to younger generation, but most of the cases along this line are fairly old.  The fact that my students were offering modern variations on the fact pattern suggests there may be good reason to revisit this area of the law. 

Perhaps any resurgence in this topic is another sign of our “aging” times. So, that leads to my question, does your state recognize failure of consideration, tied to “support deeds,” as grounds for rescission of a conveyance?