Home Money Can a power of attorney be used to sell a house for less than its market value?

Can a power of attorney be used to sell a house for less than its market value?

0 comment
House sale: Aunt wants to sell grandmother's house at a bargain price (File image)

House sale: Aunt wants to sell grandmother’s house at a bargain price (File image)

My mother and her sister have power of attorney over their mother, who is in a nursing home and needs to sell her house to help cover expenses.

The house has been valued by several estate agents at over £300,000.

However, my mother’s sister is trying to sell it to one of her family members for almost £50,000 less.

This seems illegal, since someone who has power of attorney is obligated to act in the best interests of the person they represent.

What legal advice should my mother be given to convince her sister that selling the house below market value is illegal?

My mother wants to make sure they get the highest price possible for her mother’s property to adequately cover her care expenses.

This is Money’s Tanya Jefferies responds: You are right to be concerned about your mother’s situation if your aunt tries to go ahead with this plan.

Having a power of attorney is a serious duty and you are both intended to act in your grandmother’s best interest.

You may also want to consider whether your grandmother’s local authority would consider a house sale like this a deliberate “deprivation of assets” when assessing care costs. The charity Age UK explains asset deprivation here.

We asked a lawyer to explain the legal situation below.

Chris Gilbert, Wills and Estates Partner at Nalders Law Firm, responds: I’m sorry to hear about your mother’s situation.

For the purposes of my answer, I assume that your mother and sister are appointed as joint attorneys under a durable power of attorney for financial and property matters.

Furthermore, I assume they have the authority to act independently of their mother’s ability to manage her own financial and property affairs.

A durable power of attorney states that solicitors must take into account the Mental Capacity Act 2005 (MCA), the regulations made under it and the MCA Code of Practice.

Chris Gilbert: If your mother believes that your sister has not acted in her mother's best interests, she should consider making a report to the Public Guardian's Office.

Chris Gilbert: If your mother believes that your sister has not acted in her mother’s best interests, she should consider making a report to the Public Guardian’s Office.

The code itself is long, but that being said, I would recommend that your mother give it some thought as it contains some useful information that I’m sure will help her.

Under the circumstances, it may be helpful to apply some of the principles referred to in the durable power of attorney.

Her mother will then be able to form an opinion as to whether or not she believes her sister is failing in her duties as a lawyer.

The ones that catch my attention the most are the following.

1. ‘Your Lawyers must assume that you can make your own decisions unless it is established that you cannot do so.’

At first I wonder if your mother or her sister have spoken to your grandmother about this issue.

If your grandmother has the ability to make the decision, it is ultimately her decision to make even if your mother considers it unwise. In fact, this is specifically mentioned in point ‘3’ of the durable power of attorney.

As such, it might be that your mother’s or sister’s opinion should not be considered anyway.

If we assume that your grandmother lacks the ability (this in itself is a separate issue) to make this specific decision for herself, then point ‘4’ stands out to me.

4. ‘Your attorneys must act and make decisions in your best interest when you are unable to make a decision.’

Under the circumstances, it would seem difficult to reconcile selling the property at a reduced market price (assuming you have evidence that this is the case) with your grandmother’s best interests.

Your mother should remember that if she knows that your sister is not carrying out her duties properly, she has a duty to make sure that she does something about it.

Section 4 of the MCA explains how to work for the benefit of a person who lacks the capacity to make a specific decision at the time it must be made.

If your mother feels that your sister has not acted in her mother’s best interests, then you should consider making a report to the Office of the Public Guardian.

Your mother should remember that if she knows that her sister is not carrying out her duties properly, she has a duty to make sure she does something about it.

Doing nothing could leave her open to criticism, as it could be argued that she is not acting in her mother’s best interests either.

Please note that this answer should not be construed as formal legal advice.

You may also like