Can a Power of Attorney Sell Property Before Death?

In New York, an agent in a power of attorney (POA) can sell property before the death of the principal if the agent has been granted such power in the POA.

Is the “Real Estate Transactions” Power Checked?

A POA is a document executed by a person (called the principal) granting another person (called the agent) the power to act on the principal’s behalf.

In New York, a statutory form for the POA exists where the principal can check the type of transactions an agent can execute on behalf of the principal. If the part on “real estate transactions” has been initialed by the principal, this means that the principal has given the agent authority to execute real estate deeds in his behalf, which includes the power to sell real estate property.

The Power to Sell the Principal’s Property

An agent in a power of attorney acts on behalf of the principal and can only do what the principal can do. Needless to say, if the principal is dead, the principal cannot do anything, and thus, the agent cannot act anymore on behalf of the principal for any matter.

However, when the principal is alive, the agent can act in behalf of the principal for the matters authorized in the POA. Thus, if the real estate transaction portion has been initialed by the principal and assuming that the POA is valid and executed in accordance with law, the agent can sell the principal’s property.

POA Agent’s Abuse of Authority

Oftentimes, lawyers are asked to intervene when the principal’s heirs discover that an agent has abused his authority. This is also called a breach of fiduciary duty.

An agent is a fiduciary of the principal, and as such, an agent’s relationship with the principal is governed by law and subjected to a higher standard of care. Under the General Obligations Law, an agent acting under a power of attorney must act in accordance with the principal’s instructions, and if there are no instructions, in the best interest of the principal to avoid conflicts of interest. An agent must also keep the principal’s property separate and distinct from any other property owned or controlled by the agent. The agent must also keep a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal. The agent may be subjected to liability for conduct or omissions which violate any fiduciary duty.

For example, an agent has sold the principal’s real estate property using the POA, but deposited the real estate proceeds, not in the principal’s bank account, but the agent’s personal bank account. The heirs discover this fact before the principal died. What is the legal remedy?

In this case, you, as an heir, could have several remedies, depending on the unique circumstances of your case. If the principal still has capacity, it is important that the principal revoke the agent’s power of attorney. If the principal does not have capacity anymore, the heirs may request the revocation of the agent’s power of attorney and the appointment of a guardian under Section 81.29 of the Mental Hygiene Law.

Similarly, a special proceeding may be initiated under the General Obligations Law 5-1510, requesting the court to revoke the power of attorney.

In both petitions, a relief may be requested, asking the court to direct the agent to return the money and pay any damages for such breach of fiduciary duty.

Questioning an agent’s power to sell the principal’s property under the POA must first be done through the principal. When it appears that the principal does not have the capacity to understand the agent’s breach of fiduciary duty can heirs come in to petition the court for relief. Should you need assistance on POA-related matters, we at the law offices of Albert Goodwin are here for you. 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].