Selling under a Power of Attorney

[DeccyDi]

Grateful for any advice anyone can offer. Am liaising with another family member about selling a house belonging to someone who lacks mental capacity. We have Power of Attorney and a capacity assessment in place. Other family member wants to sell a bit below valuation but I don't know if this would even be allowed. Don't we need to demonstrate we've gone with valuation or tested market to demonstrate we're acting in best interests of person without capacity?

IANAL but I would expect you to test the market to get the best possible sale price. If one of you wanted to buy, you could agree a period you will market property e.g 3-6 months and match highest offer.

When we did this, we got three valuations and went with the middle one. Marketed the bungalow and got asking price. The next time we did the same, but were only
offered below asking price. We accepted the highest price offered even though it was below valuation as it was the best and only option. Absolutely no one questioned as to why we didn’t hang in for more money.
As it turned out similar properties subsequently went for even less money (£30k less).
summary: treat it as if it’s your own property and get the best you can given the market conditions where that property is/type.

My understanding is that in being granted POA it has already been established that you have the best interests of the person you are representing; that you don't need to keep demonstrating thus.

Would your family member sell their own home under market value?
What are the reasons for needing a quicker sale i.e. why you would accept under market value?

Thanks for the replies - reasons for low value sale are a combination of wanting to meet the needs of prospective purchasers, who aren't that well off and have quite specific requirements, and prospect of a quick sale without incurring estate agent fees.

Not a lawyer but the best interest of the purchaser is irrelevant. You have to act in the best interests of those you hold PoA for.

That's said if their offer is £10k below market price and an estate agent commission would be £10k there is no difference. But letting it go for £30 below market to save £10 is a different matter.

I am a little intrigued as to who you have to demonstrate it to?

I mean I completely understand and agree with the moral aspect of acting solely in the best interests of the person lacking capacity. But does someone literally check? If so, who and when?

@user143677433 you can be reported to the court of protection if someone thinks you aren’t acting in the best interests of the person lacking capacity. (Eg disgruntled family member).
Very occasionally, the courts can randomly pick someone holding a poa and ask them to substantiate all their decisions. It’s very rare but not something to be forgotten (especially if you are me!).
It’s a good thing to keep detailed records of what’s been spent/sold and why you’ve acted as you did.

Should also add. : social services may ask how a financial poa has been used if seeking financial help for someone about to enter care.

Very interesting.. we are about to do the same but a family member who gave the POA doesn’t even have a bank account here, can we sell and use our own bank account?

Are you proposing to sell to a relative or friend?

Can you explain?
You have POA for a family member. That family member doesn't have a bank account in the country where their financial affairs take place?
The method by which someone with POA carries out financial matters should have been established between both parties (with the guidance of a solicitor) at the time the POA was prepared.

@LadyLapsang No, not selling to a relative or friend. My co-attorney knows something of this other family's situation just because we all come from a small town.

Will the reduction in price be equal to the outlay in estate agent fees? If so, then probably ok to do so. If the reduction is greater than the cost of estate agent fees - then no, I would think it’s the best plan - you need to achieve the best price possible.

Bugger - it’s NOT the best plan.

I think you'd need to be careful.

If you're saying that it has been valued at X but you are going to accept 10% less because you know that it's the Smiths who have had a family tragedy and can't spend more then that isn't a decision you should make if it's not your money.

You'd need to put the house on the open market as you can't demonstrate its value otherwise.

I know on one hand it sounds a nice thing to do ie your relative won't use all the money and the buyer could really do with a bit of a discount but that's really only something you can do if you are selling a property you own yourself.

Thanks @GU24Mum - that's my feeling about this too.

Sorry to break in to someone’s thread.. but, yes, selling under poa in the country where relative does not even have a bank account. Our poa does not say anything about bank account.

Your POA implores you to act in the best interests of your relative, NOT the unfortunate circumstances of a potential buyer.

That said, as pp have suggested, if you get a few valuations, and their offer is in the ballpark minus whatever the EA fee, I would say that IN NORMAL CIRCUMSTANCES that could be shown as acceptable.

HOWEVER, I've just sold my mum's house, went for the average valuation (there was quite a big range) and we didn't get a single offer below asking price, and sold for 12% over. Even with EA fees we're on top.

We bought a POA. We got some off, the house had been on the market for a few months and everyone else thought it would be too much work. It was a races to get it bought before the actual owner lady died, but we made it luckily

I would strongly advise you not to do this via your own account. Set up a bank account in the name of the person and you as POA. This way you keep their money completely separate and you can pay costs they incur e.g. solicitors from their account.

No matter how well intentioned, putting money into your account can cause problems and may lead to accusations of mishandling the money. Just imagine what would happen if you had the money in your account and (sorry) you were killed in a car accident. How would your executors untangle the finances, keep it separate.