Real estate is often the most valuable asset a person owns, so it is natural to wonder whether an agent under a power of attorney can sell property on the principal's behalf. The short answer is yes, in many cases, but there are important conditions, limitations, and safeguards that apply. Understanding these rules can help you draft your POA properly and protect your real estate interests.
When Can an Agent Sell Property?
An agent can sell real property on behalf of the principal only if the power of attorney document specifically grants that authority. A general statement like "my agent may handle my financial affairs" may not be sufficient for real estate transactions in many states.
Most states require that the POA explicitly include language authorizing real estate transactions. This typically means the document should specifically state that the agent is authorized to sell, convey, transfer, or otherwise dispose of real property owned by the principal. Some states require even more specific language, such as identifying the particular property or type of transactions authorized.
If the POA does not include real estate authority, the agent cannot sell the principal's property, regardless of how broad the other financial powers may be.
Requirements for Real Estate POAs
Real estate transactions conducted through a power of attorney are subject to additional requirements beyond those that apply to other financial transactions.
Notarization. A POA used for real estate transactions must almost always be notarized. This is a universal requirement across virtually all states, since the POA will be presented to a title company, recorded with the county, or both.
Recording. In many jurisdictions, the POA itself must be recorded in the land records of the county where the property is located, alongside the deed or other transfer documents. This puts the public on notice that the agent had authority to act on behalf of the principal.
Specific property identification. Some states require the POA to specifically identify the property being sold, either by street address, legal description, or parcel number. Others allow a general grant of real estate authority without identifying specific properties.
State-specific forms. Certain states have mandatory statutory POA forms that must be used for real estate transactions. If your state has such a form, failing to use it could result in the title company or buyer's attorney rejecting the POA.
The Agent's Duties When Selling Property
An agent who sells property under a POA has significant legal responsibilities. They are bound by the fiduciary duties that apply to all POA agents, with particular relevance to real estate transactions.
Duty to act in the principal's best interest. The agent must seek a fair market price for the property. Selling the property for a below-market price, especially to the agent themselves or to a friend or family member of the agent, can constitute a breach of fiduciary duty.
Duty to avoid self-dealing. An agent generally cannot buy the principal's property for themselves unless the POA explicitly allows it and the transaction is at fair market value. Self-dealing is one of the most commonly litigated areas of POA law.
Duty to keep accurate records. The agent must document all aspects of the transaction, including the listing process, offers received, the sale price, closing costs, and how the proceeds were used or deposited.
Duty to follow the principal's instructions. If the principal has given specific instructions about the property, such as a minimum sale price or preferred buyers, the agent must follow those instructions as closely as possible.
Common Situations Where a POA Is Used for Real Estate
Several scenarios commonly involve using a power of attorney for property transactions.
Incapacity. If the property owner becomes mentally incapacitated due to dementia, a stroke, or another condition, their agent can sell the property to fund their care, downsize their living situation, or manage their finances.
Absence. If the property owner is out of the country, deployed with the military, or otherwise unavailable for an extended period, they can use a POA to have someone handle a real estate transaction in their absence.
Convenience. Even when the principal is available and competent, they may prefer to have someone else handle the details of a real estate transaction, especially if the property is in a different state.
Estate and eldercare planning. Selling property may be part of a larger plan to simplify an elderly person's finances, move them into an assisted living facility, or prepare for the distribution of assets.
Challenges and Potential Problems
Using a POA for real estate is not always smooth. Several challenges commonly arise.
Title company resistance. Title companies and their underwriters can be cautious about accepting POAs for real estate transactions. They may require their legal team to review the document, request a fresh certification that the principal is still alive and has not revoked the POA, or demand that the POA be updated to their preferred format.
Buyer concerns. Buyers and their attorneys may be uneasy about purchasing property from an agent rather than the owner directly. They may worry about the validity of the POA, the agent's authority, or the risk of the transaction being challenged later.
Lender requirements. If the buyer is financing the purchase with a mortgage, their lender may have its own requirements for accepting a POA-based transaction. Some lenders are reluctant to proceed without additional verification.
Family disputes. The sale of a parent's home by one adult child acting as agent can trigger disagreements among siblings, especially if they disagree about whether the sale is necessary or whether the price is fair.
Safeguards for Property Owners
If you are granting your agent authority over real estate, consider including these safeguards in your POA.
Specify the scope. You can limit your agent's real estate authority to specific properties, specific types of transactions (selling but not mortgaging, for example), or transactions above a certain value.
Require a minimum sale price. Including a minimum acceptable sale price in the POA can prevent your agent from selling the property for less than it is worth.
Require co-agent approval. You can require that real estate transactions be approved by a second agent or a designated family member before they can proceed.
Prohibit self-dealing. Explicitly state that your agent cannot purchase your property for themselves or sell it to a related party without independent appraisal and approval.
Include an accounting requirement. Require your agent to provide a detailed accounting of any real estate transaction, including all proceeds, costs, and the disposition of funds.
Can a POA Be Used After the Owner Dies?
No. A power of attorney terminates immediately upon the principal's death. Once the property owner dies, the agent no longer has any authority to sell or transfer the property. At that point, the executor of the estate (named in the will) or an administrator appointed by the court takes over the management and disposition of the deceased person's assets, including real estate.
This is an important distinction. If you are planning for the eventual sale of property after your death, that is an estate planning matter handled through your will or trust, not your power of attorney.
Get Your POA Right for Real Estate
If you anticipate that your agent may need to handle real estate transactions on your behalf, it is essential that your power of attorney is drafted with that specific authority clearly stated and in compliance with your state's requirements.
mypoa.ai can help you create a power of attorney that includes real estate powers, tailored to your state's laws. Your download includes detailed execution instructions for proper signing, witnessing, and notarization to ensure your document is accepted by title companies and county recorders.