Selling a Property with a Power of Attorney Document

– Why Does the Bank Want Something More?

So Aunt Gertrude has named her Niece Milly as her attorney in fact through the power of attorney document. Suppose Aunt Gertrude wants to sell her house, but because of infirmity, she is unable to go to the bank to take care of any financial arrangements, or to the realtor’s office for the closing. Is the power of attorney document she already executed sufficient to allow Milly to show up at the closing and to sign the myriad of papers required to sell a home today?

The answer is “probably.”

Recently (within the past two years), some banking and other financial institutions are requiring very specific language in a power of attorney document in order to complete real estate transactions. At first blush, the document the bank is handing you looks nearly identical to the fully executed power of attorney document you handed to them (just before they refused it).  These institutions are trying to protect themselves.

If Aunt Gertrude is not careful, she may not be able to sell her house after all. Not because she doesn’t want to sell it, or because she doesn’t have a willing buyer, or because the buyer does not have the money. No, it could be because the power of attorney document, though it was thoroughly written and is perfectly legal, does not make this particular financial institution happy.

So what is the moral of the story? If you or a loved one is selling or buying real property (i.e., real estate with or without a building on it), show the power of attorney document to the lender at least thirty days in advance of the closing date.  That way, if your lender wants to have you execute their own version of a power of attorney document, you will have time to take the “special” document to your attorney for his or her review and execution, and the closing date will not have to be rescheduled (and the sale of Aunt Gertrude’s house).  

Keep sending us your feedback. We will try to incorporate some of your questions into the upcoming adventures of Aunt Gertrude and her niece Milly.

Should Your POA Be Paid?

       Aunt Gertrude, our elderly character, and her niece Milly, the attorney in fact through Aunt Gertrude’s Power of Attorney, face life every day, just like you and I do. The difference is that there is this added level of responsibility for Milly. She not only takes care of her own life, her own needs, and her own dreams, but she is the attorney in fact for her Aunt Gertrude. So what does that mean to Milly? What added responsibility does Milly carry? And what does Milly get for taking on this burden?

       How about payment?

       This step is often completely overlooked. Aunt Gertrude and Milly could make a fair arrangement of payment-for-services.  In most cases, Power of Attorney documents are drafted as a part of a complete package of protective documents – Last Will and Testament, Living Will, Medical Directives, Power of Attorney, and so on.  Payment is not a consideration when you are discussing the creation of a ‘safety net.’

       You should be aware, however, that it is completely within the bounds of the law for a principal (here, Aunt Gertrude) to pay an agent (here, the attorney in fact, Niece Milly) for work that is performed by the agent on behalf of the principal.

       So what is fair?

       The answer to that is as diverse as our great country is diverse. Aunt Gertrude and her Niece Milly are free to negotiate any agreement they like. Perhaps if they approach this subject now, before any misunderstandings occur, they will be less likely to have a ‘cat fight’ later if a problem occurs between them (like Milly helping herself to something that, perhaps, is more than her dear Auntie would have liked – like her MONEY!).

       This topic is a new one within the power of attorney discussion. We’ll move this along a little further the next time.

        Continue to send us your comments. . .we’re having a little trouble allowing the comments to be shared online. We see them, but now (if we can finagle the technology) we are going to allow you to see them, too!