Agents and their clients often have questions about what transactions may be exempt from the requirements of the Seller Disclosure Law (spoiler alert: they’re listed on the first page of PAR’s Seller’s Property Disclosure Statement (Form SPD)).
One of the most common exemptions is the one that applies to estates and trusts. But it’s a common misconception that this exemption also covers individuals selling property using a power of attorney. It does not. The law specifically lists exemptions, and holding a power of attorney is NOT, by itself, an exemption.
Why?
Great question.
In Pennsylvania, a power of attorney generally steps into the shoes of the principal. In this case, that’s the seller. So, if the transaction is one where the “seller” is required to provide a disclosure form, either the owner needs to fill out the form, or the POA potentially inherits that responsibility when they are filling the shoes of the owner.
One of the difficulties in figuring out the POA’s responsibilities is that the role of a POA could vary greatly among different transactions. Let’s look at two common scenarios. In both, assume that Mom owns a property, and Daughter is helping to sell the property as Mom’s POA.
Example #1: Convenience
In our first example, Mom travels extensively and spends half the year in Florida. She is fully competent to make all the decisions about a transaction, but has given Daughter a POA so she can handle the details of the transaction on her behalf because it’s easier for her. If Mom is competent and able to fill out a seller disclosure form, the best approach is to … have Mom fill out the seller disclosure form. The POA doesn’t shut Mom out of the process or supersede her knowledge of the property, so having her fill out the form likely reduces the risks to all parties.
Example 2: Lack of Competency
The other most common scenario is one in which Daughter has the POA because Mom is unable to make decisions on her own because of illness or incompetency. Since Mom is unable to fill out the disclosure form, that responsibility of the “seller” could rest with Daughter as the POA. In that situation, the best advice is that Daughter should do the best she can to fill out the form with whatever knowledge she may have.
There may be situations where the power of attorney has very limited knowledge of the property, in which case they would fill out the form with whatever little they may know and a whole lot of “unknown” answers. (When any seller says “I don’t know that answer” the best response is always to select “unknown” rather than leaving a question blank.)
But the POA may actually know a fair amount about the property, depending on the circumstances. Maybe they wrote a check out to the roofer last year when the roof needed replaced, or they helped file a property insurance claim. Or maybe, “hypothetically speaking,” they have actual knowledge that the air conditioning was replaced in 2015 because they were at Mom’s house for an anniversary celebration when the AC stopped working in the middle of June. (Sorry, Mom.) Or, for that matter, if it’s the house they grew up in, the POA might actually have a lot of background information about the property condition, repairs and renovations just because they lived there. That all counts.
How Should a Power of Attorney Complete Form SPD?
Our best advice is that even if the POA thinks they only have limited knowledge, they should still go through the entirety of Form SPD to fill out the form to the best of their ability. The questions on the form can help trigger memories of events that might otherwise be forgotten. Seeing a question about the roof, HVAC system, plumbing or other aspect of the property may remind the POA of an event they were involved in or knew about.
Communication is especially important when a POA’s knowledge of the property is limited. The listing agent should make sure the buyer’s agent and buyer have a clear understanding of the situation and that’s why the information in the disclosure form may be limited. While that communication does not eliminate potential liability for the seller, who fills out the form incorrectly, it can help demonstrate that the power of attorney made a strong effort to provide as much information as possible.
The Bottom Line
A power of attorney may not have all the answers about a property, but that does not mean there is nothing to disclose. The power of attorney should complete Form SPD to the best of their knowledge and ability, paying careful attention to questions that may trigger memories or repairs, problems or other relevant information. Ultimately, having a power of attorney involved in a transaction does not, by itself, exempt the seller from the Seller’s Property Disclosure requirement.