Can a Power of Attorney Sell Property Before Death?

A power of attorney (POA) is a legal tool that allows an agent to make decisions on behalf of the principal. POA is used in situations where the principal is unable to manage their affairs due to illness, incapacity, absence, or other similar scenarios. In the principal’s stead, the agent is given authority to manage affairs related to the principal’s finances and healthcare, even selling a home or property.

A financial advisor can also answer any questions and help you make the right decision for your situation.

Using Power of Attorney to Sell a Property Before Death

Selling a property through the use of a power of attorney is a common practice, but it’s important to understand the role of power of attorney after death.

After the principal’s death, the role of power of attorney ceases to exist, meaning POA can only be used to sell a property before the principal’s death. After the principal’s death, the property would need to be sold through the probate process. More on that below.

Requirements for Using Power of Attorney to Sell Property

A power of attorney must meet certain legal prerequisites to be used in a real estate transaction.

The POA should be the type called a durable power of attorney, which means it remains valid even if the principal becomes mentally incapacitated. The POA document itself must clearly state the scope of authority granted to the agent, and include the power to conduct real estate transactions.

The document should also be signed by the principal while they are of sound mind, witnessed by at least two adults who are not parties to the agreement, and duly notarized to ensure its legal standing and enforceability.

While the specifics may vary by state, this is generally enough to satisfy most requirements.

Additionally, the property deed, title documents and any necessary disclosure forms regarding the property’s condition should be compiled.

Steps for Using Power of Attorney to Sell Property Before Death

A couple drafting power of attorney documents to sell property before death.

In general, the agent would follow the below steps to use power of attorney to sell a property before the death of the principal:

The agent should verify that the POA document includes the authority to handle real estate transactions.
An appraisal of the property should be obtained to determine its fair market value.
The property can then be listed for sale. It might be helpful to consider involving a real estate agent familiar with POA transactions.
Then comes the standard negotiating with potential buyers, accepting an offer, and preparing the sale agreement to ensure all terms favor the principal.
Close the sale, with the agent signing all necessary documents under the POA, transferring the title, and managing the financial transactions.

Sometimes issues can arise, including legal disputes over the validity of the POA document, allegations of the agent overstepping granted authorities and potential conflicts with the principal’s beneficiaries, which is why some agents choose to work with a real estate lawyer or attorney experienced in handling such matters.

Probate Process for Selling a Property After Death

Probate is a legal process that comes into play when dealing with the estate of the deceased, particularly when the deceased leaves behind assets such as real estate. The process begins with validating the deceased’s will by a court, ensuring that the document reflects the deceased’s true intentions. In the absence of a will, the estate is settled according to state laws, which typically involves distributing assets to the closest relatives.

Probate serves two main purposes:

It helps in settling debts and taxes owed by the estate, and
It ensures that the property is transferred to the rightful heirs or new owners in a manner that is legally binding and recognized.

The steps involved in the probate process generally require the oversight of an executor or an administrator appointed by the court. This appointed individual is responsible for managing the estate according to the will’s directives, or state laws if no will exists.

Bottom Line

A man using power of attorney to sell a property before the principal's death.

While POA can extend to real estate transactions, power of attorney can only be used to sell a property before death. After the principal’s death, the property must be sold through the probate process. To ensure power of attorney can be used to sell a property before death, the principal and agent should work together to ensure the correct type of power of attorney is drafted and that the documentation explicitly grants the agent the right to conduct real estate transactions on the principal’s behalf.

Tips for Using Power of Attorney

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If healthcare decisions are going to be part of your plans for using power of attorney, it’s important to make sure you have the health insurance you’ll need so your agent won’t have to worry about insurance problems if they have to make decisions for you.