Selling real estate via a power of attorney or an executor requires different handling than a regular sale. A realtor must ensure that several things are in place, or the sale can be harmed.
Before explaining the subject, it is most important to contact a lawyer regarding any questions about this subject. Realtors are not lawyers and almost certainly don’t have any formal education in estate law other than field experience. So, at all times, contact your lawyer first, regarding this subject of wills, estates, POA’s and executors.
Selling real estate via POA
Property can be sold at any time while the owner is still alive, and as long as the owner is mentally capable and clear of mind to make decisions. However, sometimes when one gets older, it may be necessary for a homeowner to give permission to a third party to handle the sale of a home. This third party is called the ‘attorney’. The attorney helps with the sale on behalf of the homeowner. This attorney can be any family member, friend or acquaintance. It is possible to appoint more than one attorney. An attorney never becomes the owner of this client’s property.
To sell real estate one must be mentally capable
Specific instructions via the POA
This article is specific to selling real estate. However, obviously, a POA can apply to anything such as cash, stocks and valuable belongings such as art and jewelry. But to allow an attorney to sell real estate specifically, the POA must indicate that it is only for real estate, and for which property or properties in case there are more than one.
Enduring Power of Attorney
The power of attorney is only valid as long as the owner is clear of mind and mentally capable to instruct the attorney. If the owner becomes mentally incapable, for example, through a stroke, the power of attorney becomes invalid. In order to represent someone who is not mentally capable, or becomes mentally incapable, one needs an Enduring Power of Attorney, or EPOA. So, for example, if a parent gave a child a POA, and the parent suffered a stroke and became mentally incapable, this POA would become invalid. In this case, only an Enduring Power of Attorney is valid, allowing a child to sell the property.
POA vs executor
When the owner passes away, both POA and EPOA become invalid. In this situation, a potential sale of a property comes to a halt. After the owner passes away, the testament becomes valid. The appointed person in a testament is called an executor. This executor can be the same, or a different person from the attorney.
Grant of Probate
Without a grant of probate, the executor is not allowed to sell real estate on behalf of the deceased. Probate, a process that goes through the court, must first be granted. In essence, it is the court that confirms that the executor who is named in the testament is authorized to sell a property.
This process of ‘granting probate’ can take some time, sometimes even up to several months, depending on the court. A lawyer can give a current update on the estimated times of probate. Once probate is granted via the court, the name of the executor is added to the title. This process goes via the Land Titles Office and will appear on title as the ‘executor of “Mr. John Smith”, for example.
Advantage of having a POA or executor
Clear instructions really helps those who need to execute
A good option may be to name certain professionals in the POA or testament. For example, appoint a particular realtor to sell a property. This is especially appropriate when someone has had a good relationship with a realtor for many years, as then trust is already established.
Disadvantages of selling via POA or executor
Selling a property via probate often gives pressure. The home is often the largest asset in someone’s estate, and often any beneficiaries of the estate want to move forward as quickly as possible. This can put pressure on the family dynamics.
Although there may not be any hard statistics on this, in general, a property that sells via an attorney or an executor seems to sell for a lower amount. The listing on the MLS indicates the seller’s name and if it is a sale via a POA or an executor. Because the person who is now in charge of selling the home is not aware of any defects and cannot make any guarantees or warranties, these homes are also often sold ‘as is’. This is a term that often negatively affects the sale price.
The real estate market might also just be in a downturn, and just like stocks, selling needs some better timing. Furthermore, any carrying costs such as utilities, property taxes and condo fees continue.
Lawyer and realtor working together
The entire process of selling a home via an attorney or executor comes with many angles. For example, what if the owner passes away while the home is listed via the power of attorney? Taking it a step further, what if the property was already conditionally sold and the owner passes away? Again, many scenarios are possible, and it is important to understand these and the different consequences. It is very important to stay in close contact with the lawyer and potential realtor. Also, the lawyer and realtor must stay in contact to make sure the law is followed and that the sale is smooth.
Tanja van de Kamp has been a realtor in Calgary since 2009. Before moving to Canada, Tanja was a lawyer and crown prosecutor in the Netherlands for 12 years. She is not licensed to practice law in Canada, however, her background gives her great knowledge, understanding and skills that translate into a smooth process of selling real estate. Since 2009, she has built up her experience in selling real estate via power of attorneys and executors. Contact her directly via the contact form below.
Please note: The above is general information and not considered legal advice. We do our best to write informative articles about real estate in Calgary, Alberta. If you have any questions or concerns about our comments, please feel free to contact us or speak to your legal advisor.