Astrid Storey is originally from Panama and spent most of her early years traveling through Central and South America. She arrived in Denver in 2003, the day after graduating college. During the next decade-and-a-half, she’s juggled a career in a variety of creative and marketing roles while building her own studio, Storey Creative, with clients in real estate, health care, publishing, and tech.
“Power of attorney” (POA) is a flexible legal tool that grants permission for someone to act on another’s behalf on a temporary or permanent basis. In real estate, this can be an incredibly useful option for all sorts of situations, like if you had to sell your house but couldn’t be there due to a job relocation or deployment.
Many people also work out power of attorney arrangements with their loved ones through estate planning, in case the unexpected happens. For health reasons, you may need to step in and handle affairs related to selling the family home or make plans to entrust your son, daughter, or close friend with this very important job.
Find a top real estate agent near you
We analyze millions of home sales to find real estate agents that sell homes faster and for more money. It takes just two minutes to match you with your personalized recommendations.
However, selling a home is complicated in its own right. Add power of attorney to the mix, and you face an additional set of rules, paperwork, and communications. In this guide to power of attorney to sell property, we’ll cover the different types and scopes of power of attorney that exist, how to talk about power of attorney before you need it, and the steps necessary to make sure it’s honored (without being abused). Finally, we’ll reflect on the philosophy of power of attorney and the enormous responsibility it bears.
POA documents will use special legal terms for the individuals setting up this arrangement:
The agent will have a fiduciary responsibility to always act in the best interest of the principal for as long as the power of attorney is valid. A fiduciary, according to the Consumer Financial Protection Bureau (CFPB), is a caregiver in charge of making financial decisions.
Whether you anticipate that you’ll be on the principal or agent side of a POA agreement, you should be familiar with the different types of power of attorney, their uses and limitations, as well as any restrictions around when to set one up so that it’s ready when you need it. Otherwise, you or your loved ones could be leaving your assets — like the house — at risk.
A non-durable power of attorney allows an agent to act on someone’s behalf for a limited period of time or to complete one particular transaction. Think of it like hiring a contractor to come in for a one-time job. Once the project is over, the contractor moves on to his next project. Similarly, with a non-durable power of attorney, once the transaction is complete, or the time period ends, the power of attorney is revoked.
A durable power of attorney is when an agent can take over all aspects of someone’s affairs, in case he or she were to become incapacitated. This type of power of attorney kicks in as soon as the principal is incapacitated and stays valid until the principal’s death. However, incapacitation puts both the principal and agent at risk of a variety of scams that target elderly or infirm people. The CFPB has put together a list of actions you can take to protect yourself and your assets from being abused in this type of circumstance.
A special or limited power of attorney is a different kind of non-durable power of attorney used in states like California for real estate transactions when the seller can’t be present due to absence or illness. Because it’s limited in both time and scope, it’s a great tool when you want to give someone a very specific responsibility.
A medical power of attorney gives an agent (often a family member) authority over someone’s medical care once a doctor determines they are unable to make decisions on their own.
A springing power of attorney is a special feature you can add to a limited or a durable POA agreement that makes it “spring” into action once a certain event occurs, like a trigger.
If you’re using a power of attorney for infirm or elder family members, you can split responsibilities between several family members, and give each a different scope of power of attorney. For example: One sibling gets a power of attorney exclusively to deal with financial issues — like paying bills; another sibling has a medical power of attorney and is in charge of all decisions involving medical care; and a third sibling has a limited power of attorney dealing with real estate.
In any power of attorney arrangement — and certainly when you’re splitting up the roles — make sure the actions and responsibilities for each party are explained with as much detailed as possible in the agreement. In the case of real estate transactions, according to the CFPB, states like Arizona, Florida, Georgia, Illinois, Oregon, Virginia, Alabama, Nebraska, Michigan, California, and Texas have their own rules and regulations for power of attorney, so you will want to either consult the bureau’s website or speak with a lawyer in your state to determine the kind of POA you will need to set up arrangements for property sales.
Power of attorney is not the easiest subject to bring up with loved ones, but it’s a conversation you need to have when all parties are active and healthy. According to a 2019 Report from Merrill Lynch and Age Wave, only 45% of Americans have a will, and just 18% have the recommended estate planning essentials: a will, a healthcare directive, and a durable power of attorney. Whether you’re the elder parent, or the adult child, you will want to have this talk sooner than later.
Other situations in which you may want to bring up the subject of POA include:
The key in successfully preparing a power of attorney is working with your lawyer and your family members to make sure the document is signed, notarized, and recorded before you move away, or while the relevant parties still have the capacity to legally consent to the process.
Because we know this isn’t as simple as picking up the phone and making small talk, here are a few ideas Forbes suggests to strike up a power of attorney conversation when you aren’t sure what to say:
To obtain power of attorney, you will need to follow a certain series of steps (the order and specific steps may vary depending on where you live).
Not all power of attorney agreements will include the authority to sell property. So first you need to make sure that your power of attorney covers real estate transactions.
In certain states, like California, “General or durable power of attorney cannot be used to sell real estate” says Glen Henderson a top-selling real estate agent in San Diego who also specializes in probate sales. “So, in order to start the process of selling a house with power of attorney, you have to get the limited power of attorney for the transaction drafted, notarized, and recorded.”
Second, partner with a real estate agent who has experience dealing with power of attorney real estate transactions. “A good tip,” Henderson says, “is to connect with agents who’ve worked with members of the military.”
“Because of deployments, members of the armed forces tend to do a lot of power of attorney transactions,” Henderson notes.
In many instances where the principal is healthy and of sound mind, the principal will not only get to make a final decision on the real estate agent who gets the listing, but also will get to approve the listing price.
Third, you and your agent will need to work with the title company and the mortgage holder (plus any additional financial institutions) to ensure the power of attorney will be honored.
After you complete these steps, your transaction will proceed normally with the exception that you will sign all documents in a way that properly identifies you as an agent in the transaction.
From a practical standpoint, expect your closing appointment to take longer than a regular sale — you’ll need to sign as “Sally Sunshine acting as agent for Jane Doe” instead of just your name.
If you’re acting as the agent in a power of attorney setup, you have a fiduciary responsibility to guard the principal’s interest in any transaction. Henderson likes to remind his clients that “The person you’re placing your trust in has the full power to make decisions on your behalf regarding the sale.”
The agent is not required to consult with the principal in any decisions regarding the transaction, so you need to be sure the agent will have your best interests at heart.
And there are some rules: The property cannot be sold to the agent (unless there’s an express agreement to do so) or sold at a price far below market value. These both constitute a breach of fiduciary trust, an abuse of power of attorney duties and, in some instances, a crime.
If you’re looking for more information about the intersection of real estate property and estate planning, our Estate Planning guides on the HomeLight Seller Resource Center offer tips and advice on topics like probate sales, selling a house with multiple owners, and how to sell a house you’ve inherited.
Header Image Source: (Cosmic Timetraveler / Unsplash)
Disclaimer: Information in this blog post is meant to be used as a helpful guide, not legal advice. If you need legal help setting up a POA arrangement for selling property, please consult a skilled lawyer in your area.
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
