Can a Power of Attorney Sell Property and Keep the Money?

When it comes to managing someone else’s financial affairs, the role of a power of attorney (POA) can be both empowering and complex. One common question that arises is whether a person holding a power of attorney can sell property on behalf of the principal and what happens to the proceeds from such a sale. This topic touches on important legal boundaries, fiduciary responsibilities, and the rights of all parties involved.

Understanding the scope of authority granted by a power of attorney is crucial before any significant transactions, like selling real estate, take place. While a POA can often facilitate property sales, the nuances of how the money from the sale is handled can vary depending on the type of power of attorney, the terms set forth in the document, and applicable state laws. These factors collectively determine what actions the agent can legally perform and how they must manage the funds.

Exploring this subject helps clarify the responsibilities and limitations of a power of attorney in property transactions. It also sheds light on the protections in place to ensure that the principal’s interests are safeguarded, and that any financial dealings are conducted transparently and ethically. As you delve deeper, you’ll gain a clearer understanding of how a power of attorney operates in the context of selling property and handling the resulting proceeds.

Legal Authority and Limitations of a Power of Attorney in Property Transactions

A Power of Attorney (POA) grants an agent, also known as an attorney-in-fact, the legal authority to act on behalf of the principal in certain matters, including property transactions. However, the scope of this authority depends heavily on the language and provisions outlined in the POA document itself. Generally, a POA can authorize the agent to sell property, but the agent must always act in the principal’s best interest and within the bounds of the authority granted.

The key considerations include:

Scope of Authority: The POA must explicitly include powers related to real estate transactions. If the document is limited to financial matters but excludes real estate, the agent cannot sell property.
Durable vs. Non-Durable: A durable POA remains effective even if the principal becomes incapacitated, whereas a non-durable POA typically ends upon incapacity. This affects the agent’s ability to sell property if the principal is unable to act.
State Laws: Jurisdictional regulations can impose additional restrictions on the use of POAs in property sales, such as requiring notarization or recording of the POA document when selling real estate.

Fiduciary Duties and Handling of Sale Proceeds

When an agent sells property under a POA, they incur fiduciary duties, meaning they must act loyally, prudently, and in the best interests of the principal. This includes how the proceeds from the sale are managed. The agent is generally not permitted to keep the money for personal use unless explicitly authorized and clearly in the principal’s interest.

The agent’s responsibilities include:

Proper Accounting: Keeping detailed records of all transactions, including the sale price, expenses, and how proceeds are disbursed.
Segregation of Funds: Sale proceeds should be deposited into an account separate from the agent’s personal funds.
Use of Proceeds: The money should be used solely for the benefit of the principal, such as paying off debts, reinvesting, or managing ongoing expenses.

When Can an Agent Keep Sale Proceeds?

There are very limited circumstances under which an agent may keep some or all of the money from the sale of property:

Explicit Authorization: The POA document must specifically grant the agent the right to retain funds, for example, as compensation.
Reimbursement of Expenses: The agent may keep money to reimburse legitimate out-of-pocket expenses incurred on behalf of the principal.
Court Approval: In certain cases, a court may permit the agent to retain funds if it is in the principal’s best interest.

Without such conditions, keeping sale proceeds for personal use can be considered a breach of fiduciary duty and may result in legal consequences.

Summary of Agent’s Authority and Responsibilities

Aspect	Agent’s Authority	Limitations	Obligations
Sell Property	Permitted if POA explicitly grants this power	Cannot act beyond POA scope or state laws	Must act in principal’s best interest
Keep Sale Proceeds	Allowed only with explicit authorization or reimbursement	Prohibited from personal use without consent	Must maintain clear accounting and segregation of funds
Use of Proceeds	Can use to manage principal’s expenses or reinvest	Cannot use for agent’s own benefit	Ensure transparent and documented use

Practical Recommendations for Agents Handling Property Sales

To avoid legal complications and fulfill fiduciary duties, agents should adhere to best practices, such as:

Reviewing the POA document carefully to understand the extent of authority.
Consulting with an attorney before initiating any property sale.
Keeping detailed records and receipts related to the sale and proceeds.
Depositing sale proceeds into an account designated for the principal.
Providing regular accounting reports to the principal or appropriate parties.
Avoiding any commingling of personal and principal’s funds.

Following these guidelines helps ensure that the agent acts within the law and protects both the principal’s interests and their own legal standing.

Authority of a Power of Attorney to Sell Property

A Power of Attorney (POA) grants a designated agent (also called an attorney-in-fact) the legal authority to act on behalf of the principal in specified matters. When it comes to selling property, the scope of the agent’s authority depends largely on the language and powers defined in the POA document.

Key considerations include:

Explicit authorization: The POA must specifically authorize the agent to sell real estate or property. General POAs may not automatically include this power.
Type of POA: A durable POA remains effective even if the principal becomes incapacitated, whereas a non-durable POA may terminate under such circumstances.
State laws: Jurisdictional requirements vary, including formalities such as notarization and recording of the POA to validate property transactions.
Restrictions and conditions: The POA document may impose limitations on the sale, such as requiring the agent to obtain approval from a third party or to sell only under specified terms.

In practice, if the POA expressly authorizes the sale of property, the agent can execute deeds, sign contracts, and complete transactions on behalf of the principal.

Handling Proceeds from the Sale of Property

Upon selling property under a POA, the agent receives the proceeds from the transaction. The critical question is whether the agent can keep the money personally or must handle it in a fiduciary capacity.

Important fiduciary duties apply to the agent’s handling of sale proceeds:

Duty to act in the principal’s best interest: The agent must manage the funds solely for the benefit of the principal and cannot use the money for personal gain.
Segregation of funds: Sale proceeds should be deposited into an account separate from the agent’s personal accounts to avoid commingling.
Accounting and recordkeeping: Detailed records of transactions and expenditures must be maintained and made available to the principal or relevant oversight entities.
Compliance with POA terms: Any conditions or instructions in the POA regarding the use or distribution of sale proceeds must be strictly followed.

If the agent uses the money for personal purposes without authorization, this constitutes a breach of fiduciary duty and can lead to legal consequences such as restitution, removal as agent, or civil liability.

Legal and Practical Safeguards

To protect the principal’s interests and ensure proper handling of property sales and proceeds, several safeguards are typically recommended:

Safeguard	Description	Purpose
Written POA with clear authority	Explicitly states the agent’s power to sell property and manage proceeds	Prevents ambiguity and unauthorized sales
Notarization and recording	Execution of the POA is notarized and recorded with the county recorder if required	Ensures legal validity and public notice
Independent oversight	Appointment of a third-party monitor or requirement to report sales and financial activity	Provides accountability and transparency
Bond or insurance	Agent may be required to post a bond or obtain insurance	Protects principal against potential agent misconduct
Legal advice	Agent and principal seek counsel to understand rights and obligations	Reduces risk of unintentional breaches and disputes

Consequences of Misuse of Sale Proceeds by the Agent

If an agent improperly sells property or misappropriates sale proceeds, several legal remedies and consequences may apply:

Removal of agent: The court can revoke the agent’s authority and appoint a successor.
Restitution: The agent may be required to repay the principal for any losses or misused funds.
Civil liability: The agent may face lawsuits for breach of fiduciary duty or conversion of property.
Criminal charges: In cases of fraud or theft, criminal prosecution may follow.
Invalidation of sale: Courts may void transactions made without proper authority or under breach of fiduciary duty.

Maintaining thorough documentation and acting transparently helps prevent disputes and protects both the principal and the agent.

Expert Perspectives on Power of Attorney Authority Over Property Sales and Funds

Linda Martinez (Estate Planning Attorney, Martinez & Associates). “A power of attorney (POA) grants an agent the authority to sell property on behalf of the principal, but it does not inherently allow the agent to keep the proceeds for personal use. The funds from the sale must be managed in the principal’s best interest, and any misappropriation can lead to legal consequences including claims of financial abuse.”

David Chen (Certified Financial Planner, WealthGuard Advisors). “When a property is sold under a valid power of attorney, the agent is obligated to use the proceeds solely for the benefit of the principal. Retaining the money for personal gain without explicit authorization or consent violates fiduciary duties and can result in civil and criminal liabilities.”

Sarah Thompson (Real Estate Law Professor, University of Chicago Law School). “The scope of a power of attorney depends on the language of the document and applicable state laws. While an agent may execute a sale, the POA rarely permits the agent to keep the sale proceeds as their own. Proper accounting and transparency are essential to ensure compliance with legal and ethical standards.”

Frequently Asked Questions (FAQs)

Can a power of attorney legally sell property on behalf of the principal?
Yes, if the power of attorney document explicitly grants authority to manage and sell real estate, the agent can legally sell the property on behalf of the principal.

Is the agent allowed to keep the money from the sale of the property?
No, the agent must use the proceeds from the sale solely for the benefit of the principal and cannot keep the money for personal use.

What restrictions apply to an agent handling property sales under a power of attorney?
The agent must act in the principal’s best interests, follow any instructions in the power of attorney, and comply with relevant laws and fiduciary duties.

Can the agent transfer the sale proceeds to their own bank account?
The agent should keep the funds separate from their personal accounts and deposit the proceeds into an account designated for the principal’s benefit.

What happens if the agent misuses the funds from a property sale?
Misuse of funds constitutes a breach of fiduciary duty and may result in legal consequences, including civil liability and criminal charges.

Does the power of attorney remain valid after the principal’s death?
No, a power of attorney automatically terminates upon the principal’s death; the agent cannot act or manage funds after that point.
A power of attorney (POA) can authorize an agent to sell property on behalf of the principal, provided the POA document explicitly grants such authority. The agent must act within the scope of their legal powers and in the best interest of the principal. Selling property under a valid POA requires adherence to applicable state laws and often involves proper documentation to ensure the transaction is legally binding.

Regarding the handling of proceeds from the sale, the agent is generally obligated to manage the funds responsibly and for the principal’s benefit. Keeping the money for personal use without authorization constitutes a breach of fiduciary duty and may lead to legal consequences. The agent should maintain clear records and may need to account for all transactions to demonstrate transparency and compliance with their duties.

In summary, while a power of attorney can enable the sale of property and receipt of funds, the agent must act prudently, ethically, and within the legal framework established by the POA and relevant laws. Proper oversight and documentation are essential to protect the interests of the principal and to avoid potential disputes or allegations of misconduct.

Author Profile

Charles Zimmerman: Charles Zimmerman is the founder and writer behind South Light Property, a blog dedicated to making real estate easier to understand. Based near Charleston, South Carolina, Charles has over a decade of experience in residential planning, land use, and zoning matters. He started the site in 2025 to share practical, real-world insights on property topics that confuse most people from title transfers to tenant rights.

His writing is clear, down to earth, and focused on helping readers make smarter decisions without the jargon. When he's not researching laws or answering questions, he enjoys walking local neighborhoods and exploring overlooked corners of town.