Concerned about an improper property sale made under a power of attorney? Discover your legal options.
Suppose a principal’s son is serving as her attorney-in-fact. Because the principal lacks mental capacity, he is authorized to make certain decisions on her behalf, including those concerning real estate transactions, and uses that power to transfer her home to himself without the principal’s knowledge or consent. This transfer of property isn’t discovered by the principal’s other children, who previously were entitled to the home under the principal will, until after the principal dies. They question whether it was proper for their brother to use his power of attorney to transfer property to himself that their mother intended for all of them to inherit equally. If a court were to review this transaction, it would likely find the transfer improper due to the clear conflict of interest. Even though the POA authorized real estate transactions, the transfer disregarded the principal’s estate plan and unfairly advantaged one child over the others without the principal’s knowledge or consent, and without any apparent justification. In doing so, the son breached his fiduciary duties by allowing his personal interests to override his obligation to act in the principal’s best interests.
In many cases, wrongful acts by a POA agent like this one are not discovered until after the principal’s death. In that event, legal action may need to be brought by the personal representative of the estate or by the beneficiaries who were harmed.
This example underscores the complexity of determining when a POA can sell a principal’s property. Multiple factors must be weighed, including the scope of authority granted to the agent in the POA document, the principal’s best interests and whether conflicts of interest exist.
When a principal still has capacity, they can revoke the POA and pursue legal action against the agent on their own to hold them accountable and potentially reverse the sale. But when the principal is incapacitated, the burden often falls on loved ones to seek revocation of the POA or recovery of an improperly sold property.
In this article, Keystone Law Group breaks down everything you need to know about a POA’s authority to sell property and how to safeguard your rights or those of an incapacitated or deceased principal.
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When Can a Power of Attorney Sell Property? — 5 Key Requirements
To legally sell a principal’s property, an attorney-in-fact must meet all five of the requirements outlined below. If even one requirement is not satisfied, the sale may be deemed improper or invalid, and the agent could face legal consequences.
1. Principal Must Still Be Living
Because a power of attorney is valid only while the principal is alive, any transactions conducted using a POA after the principal’s death — including real estate sales — are automatically invalid.
While an agent acting in good faith after the principal’s death (for example, if they were unaware of the passing) is generally not held liable, knowingly taking actions on behalf of a deceased principal can result in serious legal repercussions.
2. Power of Attorney Document Must Be Valid
For a power of attorney to be legally enforceable, the document must be valid from the outset. If even one of the conditions outlined below is not satisfied, the POA may be deemed invalid, which would automatically invalidate any transactions carried out under it.
In California, a POA is considered valid only if it meets the following conditions:
- The principal is at least 18 years old at the time of creating the POA.
- The principal has mental capacity when signing the document.
- The principal signs and dates the POA in the presence of a notary public or two mentally competent adult witnesses (the agent cannot be a witness), who also sign and date the document.*
*If the agent is authorized to handle real estate transactions, the POA must be notarized. Requirements may differ for medical POAs.
3. Power of Attorney Must Be in Effect
It’s important to understand that not all powers of attorney take effect immediately; the timing depends on the type of POA. If an agent sells a principal’s property before the POA is in effect, the sale may be reversed, and the agent could face legal consequences.
For example, a springing power of attorney does not take effect until the principal is declared incapacitated by a treating physician. If a principal suffers a stroke and becomes severely debilitated, the agent cannot act on their behalf until a formal declaration of incapacity is obtained. Any property sale made before this declaration would generally be considered improper and subject to reversal.
In contrast, a durable power of attorney takes effect immediately upon signing and remains in effect until the principal revokes it or passes away. An agent acting under a durable POA can make property sales without obtaining a declaration of incapacity, provided the POA grants express authority to do so. Even if the principal still has capacity, the agent may act on their behalf within the POA’s scope.
A nondurable power of attorney also takes effect upon signing, but it automatically terminates if the principal becomes incapacitated before death. In this case, any property sale made after incapacity would be improper.
Finally, a limited or special power of attorney for selling property may be granted to an agent by a principal. Such a POA typically only allows the agent to sell a designated property. Any actions beyond the scope outlined in the document would be considered improper.
4. Power of Attorney Must Authorize Real Estate Transactions
For an agent to legally sell a principal’s property, the POA document must expressly grant them this authority.
Under California Probate Code section 4123:
“With regard to property matters, a power of attorney may grant authority to make decisions concerning all or part of the principal’s real and personal property, whether owned by the principal at the time of execution or acquired thereafter, and whether located in this state or elsewhere, without the need for a description of each item or parcel of property.”
In short, an agent must have express authority not only to sell property but to manage real property in general — whether that means encumbering it with a loan, leasing it to tenants or using the principal’s funds for maintenance. Without this authority, the agent should assume they cannot conduct real estate transactions on the principal’s behalf.
5. Sale Must Be in Principal’s Best Interests
It goes without saying that an agent’s actions must serve the best interests of the principal. A principal executes a POA to protect themselves in the event of incapacity or to streamline their financial and real estate affairs, not to benefit the agent.
Any action taken in bad faith, or that serves someone other than the principal more than the principal themselves, may constitute a breach of fiduciary duty and provide grounds for revocation of the POA (if the principal is still living) and other legal consequences.
Consider the earlier example of the son acting as his mother’s POA who transferred her property to himself. Even though he was expressly authorized to make real estate transactions on her behalf, the specific action he took financially harmed the principal and also overrode her estate plan, which means the transaction likely would not be seen as being in the principal’s best interests.
If you suspect abuse by an attorney-in-fact or require guidance on making real estate transactions under a power of attorney, a probate attorney can assist.
When Is Selling Property with a Power of Attorney Inappropriate?
Even when an attorney-in-fact is explicitly authorized to handle real estate transactions, they must proceed carefully — having authority does not automatically make every transaction proper.
Below, we outline common scenarios in which using a power of attorney to sell property, even with granted authority, may still be inappropriate and could expose the agent to personal liability.
Can a Power of Attorney Sell Property and Keep the Money?
Generally, it is improper for an agent to personally benefit from selling a principal’s property. In most cases, doing so constitutes a breach of fiduciary duty, which can lead to legal consequences for the agent.
That said, there are narrow circumstances in which an agent may legitimately retain some proceeds from the sale of a principal’s property, including if:
- The POA authorizes compensation: Many POAs allow the agent to receive reasonable compensation for their services, or a specific fee or commission for real estate transactions. In these cases, the agent may collect a portion of the sale proceeds according to the terms of the POA.
- The agent personally contributed to the property: If the agent advanced funds for necessary expenses related to the property or its sale, they are generally entitled to reimbursement from the sale proceeds.
Outside of these situations, any attempt by an agent to sell property for personal gain is usually improper and could result in serious legal repercussions.
Can a Power of Attorney Sell Property to Himself/Herself?
It is generally considered inappropriate for an agent to sell a principal’s property to themselves, as such a transaction creates a direct conflict of interest and violates the agent’s fiduciary duties.
This rule applies even if an agent pays fair market value for a property. For example, an agent could reject higher offers to purchase the property at a lower price, which would not align with the principal’s best interests.
With that said, there are limited circumstances in which an agent selling property to themselves may be proper, including when:
- The POA document explicitly grants the agent the right to purchase the principal’s property.
- The sale is fully disclosed to the principal, and the principal provides informed consent — provided they have capacity.
Even in these cases, it is strongly recommended that the agent consult a probate attorney before proceeding. They must also maintain meticulous documentation of the transaction to ensure transparency and protect against potential legal challenges.
Can a Power of Attorney Sell Property to a Family Member?
The same conflict of interest that arises when an agent sells a principal’s property to themselves can also occur when they sell property to a family member, close friend or business acquaintance. Depending on the agent’s relationship with the buyer, they may prioritize the buyer’s interests over the principal’s, which could render the sale improper.
Selling property to someone the agent knows or is close with is inherently complex and must be approached with caution. The legality of such a sale depends on the specifics of the situation, including the terms of the POA and the nature of the relationships involved.
To protect the principal’s interests and avoid potential legal issues, it is crucial for the agent to consult a probate attorney before proceeding. If the principal has capacity, it is also wise to obtain their express consent and discuss the details of the sale to ensure it aligns with their wishes.
Can a Power of Attorney Sell Property Without Consent From the Principal?
Under certain circumstances, an agent with power of attorney may sell the principal’s property without their consent — provided the POA explicitly grants that authority, the sale is in the principal’s best interests and no conflicts of interest are present.
This is particularly relevant when the principal lacks capacity, meaning they cannot legally make decisions or provide consent for the sale. Even in this situation, it is wise for the agent to consult a probate attorney. Agents may also consider discussing the transaction with the principal’s loved ones to proactively prevent legal challenges.
A property sale can sometimes alter the distribution of assets under an estate plan, potentially disadvantaging intended beneficiaries. If loved ones are negatively affected, they may formally oppose the sale, which could lead to a costly property dispute. Addressing concerns with family members beforehand often can prevent litigation and preserve relationships.
If the principal retains capacity, the agent should always discuss any proposed property sale with them prior to finalizing it. This ensures the transaction aligns with the principal’s wishes and reduces the risk of lawsuits later.
Can a Power of Attorney Sell Property After Death?
An agent is never authorized to sell a principal’s property after their death, as all powers of attorney automatically terminate upon the principal’s passing.
If an agent knowingly conducts a sale — or uses the POA for any purpose — after the principal has died, the transaction may be invalidated, and the agent could face personal liability for acting in bad faith.
How to Sell Property with Power of Attorney
If you are an agent with power of attorney, it is essential to understand that selling the principal’s property is a significant responsibility. Such transactions must be approached with care and caution, and ideally with guidance from a knowledgeable probate attorney.
Below, we outline the key steps involved in selling property under a power of attorney. Completing each of these steps is generally necessary to ensure that any sale of the principal’s property is valid, legally compliant and in the principal’s best interests.
Step 1: Confirm Authority in the POA Document
As an agent, you should always have a copy of the power of attorney document that grants you authority. If you do not, it is crucial to promptly obtain one.
The POA will typically outline your specific powers and responsibilities. While a general POA may include broad authority to manage the principal’s financial affairs, that alone is not enough to authorize real estate transactions.
Carefully review the document for language specifically addressing real property sales. If such language is absent, you generally should assume you don’t have that authority. If it is included, pay close attention to any conditions attached — for example, a requirement to obtain the principal’s consent (if they retain capacity) or the approval of family members (if the principal lacks capacity), or provisions allowing you to receive reasonable compensation for handling the sale.
If you are uncertain, a probate attorney can review the POA with you and clearly explain your rights and limitations when it comes to selling the principal’s property.
Step 2: List the Property for Sale
Once you’ve established a reasonable sale price, the next step is to list the property on the open market. In most cases, it’s best to work with a licensed real estate agent to prepare the listing, market the property and attract qualified buyers.
A well-prepared listing not only maximizes exposure and increases the likelihood of competitive offers but also provides a clear record that the sale process was conducted transparently and with the principal’s best interests at the forefront.
Step 3: Complete the Closing Process
Once a buyer is secured, you may begin the closing process. This typically includes signing the required documents, clearing any outstanding liens and transferring the property’s title.
As the agent, you will need to present the POA document to demonstrate your authority to complete the sale. You may also be required to sign affidavits or other legal paperwork.
Because accuracy is critical at this stage, even a small error could delay closing or invalidate the transaction altogether. For this reason, it is strongly recommended that you work with an attorney or real estate professional to ensure the sale is finalized properly.
What to Do if a Power of Attorney Sells Property Improperly
If an agent has carried out an improper real estate transaction — such as selling property they were not authorized to sell or transferring property to themselves despite a clear conflict of interest — it is critical to take prompt legal action. The sooner you act, the easier it may be to unwind the transaction and stop further misuse of the POA.
Whether you can hold the agent accountable often depends on the principal’s capacity. If the principal is still competent, only they have the authority to bring legal action against the agent. If the principal lacks capacity, or if they passed away before the alleged POA abuse was uncovered, the responsibility generally shifts to the principal’s loved ones.
In such cases, family members, beneficiaries or estate or trust representatives may be able to intervene to pursue legal remedies on the principal’s behalf.
Step 1: Consult a Probate Attorney
There are many factors to weigh when considering legal action against an agent who improperly sold a principal’s property. The first step is determining whether the sale was wrongful at all. The next step is establishing whether you have the legal standing to bring a claim. Consulting a probate attorney early can help you answer both these questions with confidence.
If the principal is alive and competent, only they may hold the agent accountable. If the principal is alive but lacks capacity, close family members or other interested parties may often bring a claim on their behalf to revoke the POA or reverse the improper sale.
If the principal has died, legal standing usually rests with the executor or administrator of the estate, the trustee of the trust (if the property previously was held by the trust), or the beneficiaries or heirs with a financial interest in the improperly sold asset.
An attorney can also evaluate the strength of your case. For instance, if the POA gave the agent authority to sell property, and they sold it below market value to quickly pay off the principal’s debts, their actions may still be defensible. While a higher price could have been achieved, the sale may ultimately align with the principal’s best interests, making legal action less advisable.
Because these determinations are complex — and a full investigation into the transaction is often required — partnering with an experienced probate attorney is essential.
Step 2: Collect Legal, Financial and Property Records as Evidence
Although additional evidence can be gathered during the discovery phase of litigation, it’s important to compile any relevant documents you already have to support your claim when filing your petition with the court.
These may include the POA document, property deeds, sale agreements and any correspondence related to the transaction.
Collecting and organizing these records can strengthen your claim by providing clear evidence of the agent’s missteps or breaches of fiduciary duty. Strong documentation may also encourage the opposing party to settle rather than proceed to litigation, potentially saving time, reducing costs and minimizing stress.
Step 3: Clarify your Legal Goals
Before preparing your petition, it’s important to clearly define the legal outcomes you want to achieve. You may wish only to revoke the POA on behalf of an incapacitated principal to prevent further misuse, or you might seek to reverse the property sale, revoke the POA and hold the agent financially accountable for acting against the principal’s best interests.
If you are the principal and have capacity, revoking a POA is straightforward. You can create a new POA that explicitly revokes all prior POAs and provide notice to the current agent. However, if your goal is to reverse an improper sale or recover damages from the agent, filing a petition with the court is typically required.
Whether you are the principal or a loved one acting on their behalf, it is important to be as specific as possible about the remedies you are seeking in your petition. For example, if the agent sold property for below market value and you are pursuing damages, you should identify the exact amount you are seeking.
Step 4: Pursue Legal Action
Once you have identified the claims against the agent and the legal remedies you are seeking, it’s time to draft your petition to file with the court. It is highly recommended that a probate attorney handle this step, as they can ensure the petition is clear, compelling and legally compliant.
This step is critical because a well-prepared petition can influence whether the case is resolved early through settlement or proceeds to full litigation. For example, if the petition clearly demonstrates that the agent overstepped their authority or acted against the principal’s best interests in the property sale, the agent may be more likely to voluntarily step down and agree to a surcharge as part of a settlement.
Step 5: Consider Settlement as a Strategic Approach
In most cases, settling is preferable to full litigation. Court proceedings can be expensive, time-consuming and often result in an all-or-nothing outcome, which may not fully address the needs of the parties involved.
Settlement, by contrast, allows for compromise and flexibility. It can provide a faster resolution, reduce legal fees and minimize the uncertainty and stress associated with a prolonged court battle.
FAQs: Using a Power of Attorney to Sell Property
Still confused about when a power can — and cannot — be used to sell property? Explore the frequently asked questions below for additional guidance.
Is it possible to exclusively grant a power of attorney for real estate closing?
Yes, there is such a thing as a POA for real estate closing. Typically, this takes the form of a limited or special power of attorney, which authorizes an agent to act only for a specific transaction or property.
A POA for a real estate closing is usually drafted to allow the agent to complete the sale of a particular property on the principal’s behalf — and nothing more.
In contrast, for an agent to have broader authority to conduct multiple real estate transactions, they generally need to be designated under a general durable power of attorney that explicitly grants authority to handle real property matters.
Can a POA sell a house for below market value?
It depends. If the sale of the property serves the principal’s best interests — for example, to cover necessary healthcare costs or mortgage payments — the sale may be authorized, but only if the agent is explicitly granted authority to conduct real estate transactions in the POA.
On the other hand, if the agent sells the property for below market value out of self-interest or convenience, and the sale does not serve the principal’s best interests, the transaction may be considered improper. In such cases, the agent could face personal liability, and the sale could potentially be reversed through legal action.
Can I sell my parents’ house with power of attorney?
Whether you can sell your parents’ house under a power of attorney depends on several key factors. First, your parents must still be alive. Second, the POA must be valid and in effect. Third, the POA must explicitly authorize you to conduct real estate transactions on their behalf, and any attached conditions must be fully met. Finally, the sale must serve your parents’ best interests.
For example, if selling the house would leave your parents without a place to live, the sale likely would not be considered in their best interests. Conversely, if selling the property would provide funds to cover necessary medical care or an assisted living facility, such a sale more likely would be lawful and appropriate.
Can a power of attorney holder sell property to his wife?
Generally, no. An agent selling a principal’s property to a spouse or someone else close to them creates an inherent conflict of interest, as the agent may be motivated to prioritize the interests of their loved one over the principal’s best interests. In the case of a spouse, the agent may also stand to benefit personally from the transaction.
For instance, if an agent’s spouse wants to purchase the principal’s property, the agent might avoid listing the property on the open market to preclude higher offers from coming in. This could sideline the principal’s best interests, allowing the agent or their loved one to gain at the principal’s expense.
What is a special power of attorney to sell property?
A special power of attorney for selling property is a type of limited POA that authorizes an agent to sell only a specific piece of real estate.
This form of POA is generally intended for a single transaction and does not grant the agent broad authority to conduct other real estate transactions on the principal’s behalf.
Can a durable power of attorney sell property?
Being designated as an agent under a durable POA does not automatically give the authority to sell the principal’s property; the POA must explicitly grant the agent the power to handle real estate transactions.
If the agent is specifically authorized to sell real property, a durable POA allows them to act immediately upon signing. This means the agent can conduct the transaction while the principal still has capacity and continue to do so even after the principal loses capacity — without needing a declaration of incapacity from the principal’s treating physician.
Is it possible to use a general power of attorney to sell property?
A general power of attorney alone does not authorize an agent to sell the principal's property; the document must include explicit language granting that authority.
How long can a power of attorney sell property before death?
How long a POA can be used before death depends on the type of POA, the principal’s capacity and the specific terms outlined in the document.
Provided the POA at issue explicitly grants authority to the agent to conduct real estate transactions, a durable POA can be used to sell property up until the principal’s death, a springing POA, once activated upon the principal’s incapacity, can be used to sell property until death, and a nondurable POA can only be used for property transactions while the principal retains capacity.
By contrast, a limited POA is valid only for the specific real estate transaction for which it was created. Once that transaction is complete, the POA automatically terminates.
It’s also important to remember that POAs can be revoked, which can affect these timelines. If the principal has capacity, they can revoke their own POA. If the principal is incapacitated, revocation may need to be sought by the principal’s loved ones.
The most important point to remember is that a POA, regardless of its terms, can only be legally used while the principal is alive — whether for selling property or managing other affairs. All POAs, without exception, terminate upon the principal’s death.
Still confused about when a power of attorney can sell property?
If you have questions about a specific power of attorney, property sales or potential POA misuse, don’t wait. Our attorneys have extensive experience handling POA abuse claims and can help ensure that any property transactions conducted under a POA are proper and in the principal’s best interests.
Whether you are an attorney-in-fact, the principal or a loved one of an incapacitated principal, our legal team is here to help. Call us today to explore your options and protect your or your loved one’s rights.
