A power of attorney can change ownership if the power of attorney document grants the agent authority to sell that particular property.
New York General Obligations Law § 5-1513 provides for the statutory form of the power of attorney. There are a number of transactions in which the principal has to check in order to grant the agent authority to transact on behalf of the principal.
- real estate transactions;
- chattel and goods transactions;
- bond, share, and commodity transactions;
- banking transactions;
- business operating transactions;
- insurance transactions;
- estate transactions;
- claims and litigation;
- personal and family maintenance. If you grant your agent this authority, it will allow the agent to make gifts that you customarily have made to individuals, including the agent, and charitable organizations. The total amount of all such gifts in any one calendar year cannot exceed five thousand dollars;
- benefits from governmental programs or civil or military service;
- financial matters related to health care; records, reports, and statements;
- retirement benefit transactions;
- tax matters;
- all other matters;
- full and unqualified authority to my agent(s) to delegate any or all of the foregoing powers to any person or persons whom my agent(s) select;
- each of the matters identified by the following letters.
As a general rule, when the principal checks any of these letters, the principal grants authority for the agent to sell the particular property identified. However, the principal can insert provisions in the modifications portion that limits the authority granted the agent.
For example, under real estate transactions, when the principal checks that line, the agent is granted unlimited authority to act, including sell, the real estate property of the principal. As a general rule, the agent in a power of attorney can sell property and change ownership for as long as the
But the principal has the power make insert changes in the modifications portion of the power of attorney. This is where an attorney becomes useful.
An attorney can write, in the modifications portion, that the agent only has the right to buy but not sell in the principal’s name. In the modification portion, the power granted to the agent can be limited or expanded, as the principal desires.
The modifications portion is unlimited as the creativity of the attorney can provide. For this reason, it is important to have an experienced attorney well-versed in powers of attorney to help you draft this document. Should you need assistance, we at the Law Offices of Albert Goodwin can help. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].
What Transferring Ownership Through a POA Actually Looks Like
When an agent uses a power of attorney to transfer ownership of property, several elements must come together for the transfer to be effective and uncontested later:
- The POA must be properly executed. The principal must have signed in the proper format, with notarization and any other required formalities. A defective POA does not authorize anything.
- The POA must grant the specific authority needed. For real estate transfers, the POA must include real estate transaction authority. For business interests, business operating transaction authority. The default form covers most common transaction types but the principal can limit or expand them.
- The POA must still be in effect. The principal must be alive (powers of attorney terminate at death), must not have revoked the power, and the agent must not have resigned.
- The transfer must be for the principal's benefit. An agent cannot use the power of attorney to transfer the principal's property to the agent personally without specific gifting authority.
- The transfer must be properly documented. The deed (for real estate) must identify the transferor in their capacity as principal acting through the agent. The agent signs in a representative capacity.
The Gifting Authority Issue
The most important limit on an agent's authority to transfer ownership relates to gifting. Under New York's General Obligations Law, the standard statutory power of attorney does not by itself authorize gifts of the principal's assets. Gifts, including transfers to family members at less than fair market value, require specific gifting authority.
Before June 13, 2021, gifting authority was granted through a separate document called the Statutory Gifts Rider. After that date, gifting authority is built into the new statutory form with specific language identifying the gifts authorized. The new form has a default annual aggregate limit (often $5,000 unless the principal authorizes more) for gifts.
Powers of attorney signed under the old form remain valid, but use of the Statutory Gifts Rider remains necessary for those documents. Without a Statutory Gifts Rider (under the old form) or proper gifting language (under the new form), the agent cannot lawfully make gifts of the principal's property to anyone, including the agent personally, family members, or charities.
Self-Dealing by the Agent
Even with gifting authority, an agent's ability to transfer property to themselves is constrained. The agent's fiduciary duties require acting in the principal's interest, not the agent's. Transfers from the principal to the agent are scrutinized closely under common-law and statutory standards.
An agent who transfers significant property to themselves, even if the POA appears to authorize it, can be held liable for breach of fiduciary duty. The principal or the principal's representatives (after death, the principal's executor or administrator) can sue to recover the property. The defenses available to the agent are limited and typically require showing that the transfer was specifically authorized by the principal, was at fair value, was consistent with the principal's prior pattern of giving, and was not the product of undue influence.
Real Estate Transfers Specifically
When an agent transfers real estate using a power of attorney, several specific issues arise:
- Recording. The power of attorney itself typically must be recorded along with the deed. The recording office (City Register in NYC, County Clerk elsewhere) needs to verify the agent's authority.
- Title insurance. The title insurer will require the original or a certified copy of the power, photo identification of the agent, and sometimes a current affidavit confirming the principal is alive and the power has not been revoked.
- Mortgage payoff. If the property has a mortgage, the mortgage holder must be paid off at closing. The agent has to coordinate the payoff just as any seller would.
- Transfer taxes. New York State and City transfer taxes apply to most real estate transfers. The agent files the forms and pays the taxes from the proceeds.
- 1099 reporting. Real estate sales are reported to the IRS on Form 1099-S. The agent must coordinate the reporting using the principal's tax information.
When Third Parties Refuse to Honor the Power
Banks, brokerages, title companies, and other third parties sometimes refuse to accept powers of attorney. The 2021 revisions strengthened the rules requiring third parties to accept properly executed statutory powers, with penalties for unreasonable refusal.
If a third party refuses to accept a POA without legitimate reason, the principal or agent can:
- Request the third party's specific reason for refusal in writing.
- Address any specific concerns the third party identifies.
- Provide additional documentation if requested (current affidavits, identification).
- Seek a court order compelling acceptance under New York's POA statutes.
- Sue for damages and attorney's fees if the refusal was unreasonable.
In our experience, persistent and well-documented requests usually produce acceptance without litigation. The threat of a court order with attorney's fees recovery is usually enough.
Drafting Tip: Specific Property Provisions
When the principal wants to authorize transfers of a specific property, the modifications section can be used to grant that specific authority with specific limits. For example: "I authorize my agent to execute a deed transferring my interest in 123 Main Street to my daughter Susan, but not to transfer any other real property I own." This kind of specific authority gives the agent exactly what is needed without granting broader powers that could be misused.
Talk to a POA Attorney About Property Transfers
Powers of attorney that authorize property transfers carry significant consequences. We help clients draft powers of attorney that grant the right authority — broad enough to accomplish what the principal wants, narrow enough to prevent misuse. We also help families respond when an agent has exceeded their authority and the principal's assets need to be recovered.
