Navigating Power of Attorney in Property Sales
What should estate agents do if they are presented with a Power of Attorney? According to Paul Offley, Compliance Officer at The Guild of Property Professionals, a Power of Attorney is covered under the Mental Capacity Act of 2005, which is where an individual, known as a donor, wishes for somebody else to make decisions and act on their behalf. The person who has been granted the Power of Attorney, takes on the responsibility of making decisions on behalf of that donor.
He notes that estates agents may come across this when a donor’s property is going to be sold and the agent is contacted by the Power of Attorney, to sell the property on behalf of the owner. So, what is the protocol when this happens?
“Firstly, the agent should do their usual checks on Land Registry and Title Deeds, to verify that the donor is the owner of the property. Whatever an agent does to confirm legal ownership should be done in the usual way, ensuring that the donor has legal ownership of the property in question,” comments Offley.
He adds, “The second aspect to check would be the Power of Attorney itself. A Power of Attorney can be issued for Property and Finance or for Health and Welfare. So, if someone wants to sell a property, the Power of Attorney would need to reflect that it is in fact the right type of Power of Attorney for them to do so. A Property and Finance Power of Attorney would prove that the person has the right to act on behalf of the donor in such financial matters.”
According to Offley, another aspect to bear in mind is that a Power of Attorney is only valid if it has been approved by the Office of the Public Guardian (OPG). It needs to be signed by the OPG, and only once it is signed by them to be a valid document.
Offering a word of warning, Offley adds, “A Power of Attorney normally kicks in when the donor no longer has mental capacity, which means they can no longer make a decision for themselves. However, for Property and Finance, the donor can state that the Power of Attorney can become effective the minute it is approved by the Office of the Public Guardian, so make sure that box is ticked.”
It is possible for someone to appoint up to four people as a Power of Attorney, more in certain cases. Offley notes that if there are multiple people, make sure that those Power of Attorneys have joint and several liability, which means the can act independently of the others.
Now the question is, who does the agent complete their Anti-Money Laundering (AML) checks on? “Ideally, the checks should be done on the donor, as well as the people who have been granted Power of Attorney. However, this is not always possible. In certain cases, the reason the donor has issued a Power of Attorney is because they are in care or hospital, or for whatever reason are unable to provide the agent with identification. In these instances, the agent can accept a letter from the matron of the care home or hospital confirming the person’s name and that they are a resident or patient of the facility and will be for the foreseeable future. Following that, then do the usual AML checks on the people who have been granted the Power of Attorney,” Offley answers.
He notes that the Power of Attorney will be able to sign documents relating to the instruction, will have the authority to accept or decline offers, and the final say with regard to who the property is sold to and at what price.
It should be a relatively straightforward process, however, if the donor passes away, the Power of Attorney will immediately cease. In those situations, it would need to go back to the solicitors, and someone would be appointed as Executor as part of the probate. “If this happens mid-sale, the agent will need to warn all parties about the potential delays until probate has been granted and the sale can continue,” says Offley.
As a last reminder, Offley notes that agents should always check that the OPG stamp is on the document, and they should always keep a copy of the Power of Attorney as evidence of their due diligence.
