What If a Power of Attorney Fails to Maintain the Real Estate?

Linda lives in a memory care unit. Her former home, just a mile away, has been vacant for more than three years. Just before she moved to the assisted living site, she signed legal power over her affairs to her sister Gerry.

Gerry lives out of state, and rarely has time to visit Linda.

A summer storm sent water into the home just before Linda moved out. Gerry has not had the wall-to-wall carpeting cleaned or removed. The HVAC and other systems haven’t been maintained. The porch structure appears to be decaying.

The neighbors worry about the risks posed by a vacant unit in the midst, and potential erosion of their own property values. Is there anything they can do?

What Gerry Signed Up For: A Power of Attorney’s Fiduciary Role 

The power of attorney (POA) is a legal document. It allows one person to authorize another person to be their agent. An agent who’s authorized to manage a home property may transfer or sell it on behalf of the principal.

The agent has a fiduciary role. Accepting a fiduciary role means agreeing to act in the best interest of the person being represented.

Here, Gerry holds power of attorney over Linda’s real estate. This means Gerry has a legal duty to maintain the property and not to let it deteriorate. It appears that Gerry is failing to carry out the POA duties, which are overseen by the probate court in the county where Linda’s home exists.

There are general power of attorney norms and standards. In addition, each state has rules for specific situations, such as the POA in real estate transactions. Some estate planning lawyers recommend that the grantor of a power of attorney for real estate transactions think about appointing an attorney or trusted person as a co-agent. It appears that Linda would have been wise to appoint someone else in addition to, or instead of, her sister Gerry.

Linda doesn’t know what’s happening now. But real estate neglect can impact an entire neighborhood. And it can diminish the value of the neglected property itself.

Generally, under the laws of a state, a fiduciary can be removed for failing to meet their legal obligations. So, what are those legal obligations?

What Legal Duties Are Vested in the Power of Attorney?

Seniors delegate the power of attorney to trusted friends or relatives because it’s a helpful tool in real estate management. It allows seniors the ability to pick an agent to act when they know they could lose the capacity to act on their own.   

The person named on the power of attorney must act to preserve the assets of a person (the “principal”) who signs over that power. For example, in Pennsylvania, one who has agreed to serve as POA must carry out the principal’s reasonable, known expectations. Even if those expectations weren’t known, management of the assets must be done in the best interest of the principal.

Some power of attorney documents “lower the standard of care,” say the Pennsylvania elder law specialists at Gerhard & Gerhard, “so that the agent would not be held liable for mistakes of ordinary negligence, but would still be held liable for damages caused by dishonesty, gross negligence, or willful misconduct.”

In any case, one thing is clear. Gerry does have a legal duty to preserve Linda’s property, acting according to Linda’s best interest. Failure to do so can create potential safety issues, and compromise a deed’s value.

Under Pennsylvania law, if a breach of duty were to be found in court, a POA can be “liable if the value of the principal’s property declines.” So, there are cases in which states hold agents personally liable for financial losses caused by a breach of fiduciary duty.

A POA’s Removal Isn’t Easily Granted

If Gerry is falling short of her legal duties as power of attorney, she could be removed by the local probate court. Still, it would be unusual for people (especially if they are not family members with an interest in Linda’s estate) to seek removal of a POA.

Without court action, only Linda could change who holds power of attorney for her affairs. Now that Linda is no longer competent to make contractual decisions, she cannot revoke or reassign the POA document. A local probate court does consider petitions to remove POAs. But the court considers such action a last resort. The court will want to see strong, clear evidence of misconduct or failure. Probate court hearings on petitions to remove a POA involve bringing the person who holds the power into court so that evidence and testimony can be heard and rebutted. If the court finds that removal is warranted, it can issue an order accordingly, and appoint a new fiduciary.

Beyond the power of attorney, there are more powerful, court-supervised tools. One is a conservatorship for control over the property. That’s a fiduciary relationship created by the court itself. For case-specific guidance, call a local professional. A consultation with a real estate attorney can produce case-specific advice on how to proceed, short of going to court.

Other Recourse Is Available

The township will also have ordinances that hold the owners of vacant properties responsible for their upkeep. Imagine that Linda’s home is in Kennett Square, Pennsylvania. A local building, fire, or police officer may be called out to check on a vacant property. According to the town’s vacancy ordinance:

If the enforcement officer has reason to believe that a property subject to the provisions of this chapter is posing a serious threat to the public health safety and welfare, the enforcement officer may temporarily secure the property at the expense of the mortgagee or owner.

Vacant homes present risks. Leaks or unsafe conditions can go unnoticed, and worsen over the months. After a certain period of time, the homeowner’s insurance policy will not cover a home left unoccupied.

Neglected homes also become increasingly expensive to repair. Letting the home deteriorate contradicts the fiduciary duty to do what’s reasonably necessary to maintain the value of Linda’s deed. If Linda’s home happens to be part of a homeowner association, that’s one more possible source of backing for the concerned neighbors. The homeowner’s association might agree to step in and press the POA to step up to the plate. The HOA could decide it’s appropriate to do so under rules that regulate nuisances or conduct that unreasonably interferes with the use and enjoyment of the property’s other homeowners.

Important note: This article offers general information only. It is not legal advice. If you believe a vacated property has become a health or safety risk, contact the local police or fire department, or your township authorities.