Selling a home for yourself may not always be a simple process, but it is far more straightforward than selling on behalf of someone else. And yet, as our parents and grandparents get older, many of us will be asked to lend a hand when it is time for a loved one to move to the next step in their life. In this post, we’ll outline what you need to know about Power of Attorney.
The Legalities of Selling a House For a Loved One
Putting a beloved home up for sale is never an easy decision. It isn’t just rife with emotional complications; there are many legalities to be aware of. First and foremost, your relative may ask for assistance selling their home even though they remain in charge of the big decisions. Or they may ask you to take over completely, which means you will need legal documentation to sell property on their behalf. This is where a Power of Attorney (POA) document comes in.
Power of Attorney grants a predetermined amount of authority to act on behalf of another, either in financial or personal matters. There are different types of Power of Attorney to be aware of:
- General Power of Attorney: This grants sweeping authority to handle most of the grantor’s financial and legal affairs.
- Specific Power of Attorney: The grantor limits authority to a specific task or for a certain period of time.
- Continuing Power of Attorney for Property: While other types of POA will expire, Continuing Power remains even after the grantor becomes incapacitated.
- Power of Attorney for Personal Care: This allows someone the grantor trusts to make decisions about personal matters, including healthcare.
Are any of your family members thinking about downsizing? The posts below can help you make the most of this transition:
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Why Power of Attorney Exists
Put yourself in your parents’ or relatives’ shoes for a moment. As much as you hate to admit it, the day is coming when you may not be able to handle a complex process like selling your house. However, a real estate transaction is a sensitive matter that involves a massive amount of trust.
Not only is this person managing your greatest asset, but they are also privy to personal information about your finances. Needless to say, you want someone who you know will work in your best interests and who has the skills and capability to carry out your wishes.
Once you identify someone willing and able to help, assigning them Power of Attorney allows them to manage your affairs if you become injured or ill.
What If You Don’t Have Power of Attorney? Selling someone else’s property can become complicated when you don’t have the legal authority to act on their behalf. This isn’t a problem if your relative is still capable of understanding the transaction and making decisions.
However, if you find yourself representing someone who is incapacitated, the courts may be involved. This can cause delays, unnecessary stress, and expense for all parties.
When Should You Assign Power of Attorney?
Assigning POA is usually something you think about as you age. In reality, it’s better to take care of it while you are still young. Injuries or illness can happen anytime to anyone, and you’ll want someone who can step in to make the difficult decisions.
In other words, a Power of Attorney isn’t just for your parents or aging relatives; it’s a good idea at any age. Before designating a POA, you should consult with a lawyer to ensure your interests are protected and that all parties understand what is expected of them.
The questions below can help you narrow down your choices and find a POA that is both trustworthy and up to the task:
- Are you comfortable with all of the responsibilities of being a Power of Attorney?
- Will you promise to act according to my wishes, even if they differ from your personal beliefs?
- Will you have time to handle all of the duties of a Power of Attorney?
- Do you have the necessary expertise to make beneficial decisions about my finances and investments?
- Do you have any potential conflicts of interest that may prevent you from becoming my Power of Attorney?
The Rights and Responsibilities of the Grantor
When granting Power of Attorney, you become known as the “grantor.” Contrary to what you may believe, assigning a POA doesn’t mean giving up control of all of your affairs. It’s more about simplifying your life by having someone else manage tasks you no longer feel up to yourself.
As a grantor, you have the right to set any limits on the Power of Attorney document. You can also revoke POA anytime as long as you are still mentally competent. If you do so, be sure to inform all organizations involved in your finances and investments, such as banks, credit card companies, and financial planners.
As the grantor, you also have some responsibilities to ensure that your Power of Attorney can successfully carry out their duties toward you. The first step is to clearly communicate your wishes in writing so that your POA never has to guess what you want. Being clear about the scope of the authority and providing the necessary documentation enables your POA to make informed decisions. In addition, you should also review the agreement regularly to ensure both you and your POA are still happy with the terms.
As Power of Attorney, you must do everything possible to maximize the sale of your grantor’s home. The posts below will help you get results:
- How Do I Attract High-Quality Buyers to My Listing?
- How Can You Sell A House In A Tough Market?
- Elevate Your Lifestyle By Maximizing The Sale Of Your Current Home
Your Responsibilities as Power of Attorney
When acting on behalf of a loved one, you always want to represent their best interests. However, when you are an official Power of Attorney, you have a fiduciary duty to do so. This means you are legally obligated to represent them to the best of your ability, including making prudent decisions regarding the sale of their house.
In other words, you can’t shortcut the process in a way that means your loved one’s home sells for less than its fair market value or not at all. You must be diligent and committed to doing everything you can to ease your relative’s transition.
Have you been asked to sell a home on behalf of a relative or loved one? We are here to help. Reach out today to ana@asantos.ca or call 647.232.7317 with any questions you have.