Elder Abuse and Power of Attorney (POA): What Real Estate Agents Should Know
Elder financial abuse is a serious concern, particularly in communities as ours, with large senior populations. In real estate, this can include fraud involving the misuse of a Power of Attorney (POA). Because POAs are commonly used, especially with elderly clients, this type of abuse can be difficult to detect.
Older adults can be targeted for fraudulent, manipulative real estate transactions that work against their best interest, which is why POA transactions require additional scrutiny and documentation. As a real estate professional, it is crucial to be aware of the dangers of POA abuse and know some best practices to protect your clients’ interests.
What is a Power of Attorney (POA) and How is it Used in a R.E. Transaction?
A Power of Attorney (POA) is a legal document that allows someone (the principal) to appoint another person (attorney-in-fact) to act on their behalf. In real estate transactions, a “Specific or Special” Power of Attorney is required and it must be executed within the last year.
The principal must be mentally competent at the time of signing. In many cases, title companies may require proof (or a doctor’s written confirmation) the Principal was mentally competent on the date the POA was executed. Or a new Special POA can be executed during escrow to ensure the validity of the document and the signer.
Best Practices for Real Estate Agents When a Client Presents a POA:
Inform Your Escrow or Title Team: Provide the POA to Escrow or Title as soon as possible so it can be reviewed and approved, prior to entering into a contract or a Listing Agreement.
Set Expectations with Clients Early: Communication is key. Explain that a POA may require additional review, possible delays, and further documentation needs.
Red Flags for POA (Elder) Abuse:
Atypical Sales: The attorney-in-fact pushes for an immediate sale with no explanation, wants to sell the property for significantly less than market value, or to themselves or family members.
Unusual Communication from Principal: The attorney-in-fact prevents real estate professionals from contacting the principal, or the principal seems incapacitated, confused, or unaware of the transaction.
Suspicious Documentation: The attorney-in-fact refuses to show the Power of Attorney document, or the document seems altered.
Misuse of Sale Proceeds: Proceeds from the sale of the property are requested by the attorney-in-fact to be transferred to an account in the name of the attorney-in-fact or a family member, rather than in the principal’s account.
Your Partner in Keeping Clients Safe and Protected
If your next transaction involves a POA, the Uptown Team is here to help make the process as smooth as possible. We are familiar with escrow and title requirements for POAs and are prepared to review documentation early, coordinate with title for approval and keep additional eyes out for POA abuse and red flags.
If You Suspect Your Client May Be a Victim of Power of Attorney Abuse, Report it to Adult Protective Services (APS) or to Your Local Law Enforcement.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific questions regarding Power of Attorney documents, please consult a qualified legal professional.