Power of Attorney is a legal agreement that gives another individual permission to make decisions on behalf of the principal, or grantor, regarding their finances, healthcare, or assets. It is a commonly used process for older adults who want assurance that they have appointed someone they trust to respect their wishes and protect their well-being if, in the future, they may not have the cognitive capacity to make those decisions independently.
Theoretically, therefore, a person acting with Power of Attorney (PoA) can sell a property belonging to the grantor while the grantor is alive, usually because the owner wants to sell or has stipulated that they would like this to happen, such as to cover care costs.
If a property owner isn’t able to manage the sale themselves, potentially because they are unwell or have a cognitive condition, the PoA can take over the process – although there are limitations and rules that dictate what PoAs can and cannot do.
Selling a Property as a PoA on Behalf of a Living Principal: In Brief
- PoAs may be permitted to sell a property on behalf of a living grantor, but only if the conditions and rights set out in the legal document give them this authority. This isn't always the case, as many PoAs have the power to make decisions about health and care but not about finances and assets.
- There are safeguards in place to prevent PoAs from selling a principal's property for their own benefit, such as rules that prohibit them from selling the home to themselves without specific court permission.
- In some cases, a person might grant PoA from a certain time point or beginning immediately. Still, PoA powers commonly take effect when the grantor is medically diagnosed as lacking mental capacity, which could mean the PoA has no authority to sell until then.
Explaining When and How a Power of Attorney Can Sell a Living Grantor’s Property
There are several different types of PoA, and the details of the agreement will determine whether the PoA is allowed to sell the principal’s property, and when they might be able to do so:
The PoA must have either a legally valid Lasting Power of Attorney (LPA) or an alternative, an Enduring Power of Attorney, which may apply if the PoA was granted and registered before 2007. In either case, they must hold a PoA that grants them the authority to make decisions regarding the principal's financial affairs.
PoAs with permissions to make decisions only around the health and well-being of the grantor have no right to sell their property.
Their role as PoA must have already been registered with the Office of the Public Guardian, and this process can take several weeks. Therefore, if PoA has just been granted, there may be a waiting period before a sale can take place.
The grantor must have given the PoA authority to manage their financial affairs and properties from a relevant date. This can commence immediately, or when the person doesn’t have the capacity to make decisions themselves, and in the latter situation, the PoA can only act once a medical professional has confirmed this is the case.
In short, these rules mean that while a PoA representative might be able to sell a property, this must have been expressly allowed by the grantor, and a PoA can’t sell their home in any other scenario where they don’t have the requisite permissions.
The Process of Selling a Grantor’s Property as a Power of Attorney
Importantly, PoA rights cease to apply upon the principal's death. That's because at this stage the estate is handled by administrators, trustees, or solicitors, meaning the only situation in which this type of sale normally occurs is when a grantor has asked a PoA to sell for them, or is unable to decide whether to sell but remains alive.
Provided this applies, the PoA can manage every aspect of the sales process, from deciding whether to sell at auction or through an agent, signing contracts and agreements on behalf of the owner, to accepting or rejecting offers.
They must, though, act in the interests of the grantor at all times.
This means, as we touched on, that a PoA isn't usually able to sell a property to themselves or any close relative or contact, because it could create a conflict of interest and lead them to sell at below-market value, which wouldn't be in the principal's interests.
However, there is a process by which a PoA can apply to the Court of Protection for permission, which will decide, based on the facts, whether there is a case for allowing the sale to proceed after verifying that the property will be sold at a fair value.
Restrictions on Individuals with Power of Attorney Selling a House on Behalf of the Owner
PoA agreements often include specifications and instructions, so careful review is essential. The principal might, for example, have asked the PoA to sell, or advised that they only want to sell if this is necessary, or their savings no longer cover the costs of their care.
Once the sale has been completed, the proceeds must be transferred to the grantor’s account and cannot be used for the benefit of the PoA.
Support and Guidance on Selling a Property with Power of Attorney
Property sales can be complex, and although there aren’t any particular timeframes or deadlines, it’s normal for the PoA to be required to complete a sale as quickly as possible to release funds that the principal may rely on.
Therefore, many choose to sell at auction, ensuring they sell as quickly as possible, releasing the capital for the grantor to use, and doing nothing that could be seen to delay the transaction.
PoAs who have been tasked with selling a property and would like further details about selling at auction, the process involved, and how to ensure they're complying with all the relevant rules are welcome to contact the experienced Clive Emson Land and Property Auctioneer team nearest to them for more information.
