What to do when the home seller has dementia?

A Power of Attorney allows a person with dementia (“the principal”) to name another individual (“the agent” or “attorney-in-fact”) to make financial and other decisions when the person with dementia is no longer able. 

As with any Power of Attorney, the decision in regards to who to appoint as the attorney-in-fact should be made after careful consideration.

In addition, a successor agent should be named in the event the original agent is unavailable or unwilling to serve.  

The Power of Attorney does not give the appointed person the authority to override the decision making of the person with dementia. The person with dementia maintains the right to make his or her own decisions as long as he or she has legal capacity.

However, just because there is a Power of Attorney, it does not mean that the title company will allow it to be used for the sale of the property. If you plan on using a Power of Attorney for an individual with dementia, be prepared to answer the following questions: 

1. When was the Power of Attorney executed?
2. When was the principal diagnosed with dementia?
3. What is going on with the current transaction?  
4. How are the funds to be disbursed?
5. Who is the attorney in fact and what is that person’s relation to the principal?

When dementia is involved, there is always a concern that the principal may not have been competent at the time the Power of Attorney was executed. 

The best way to persuade the title company to use the Power of Attorney is to obtain an affidavit from the principal’s physician setting forth the approximate date that the principal was diagnosed with dementia and a statement that at the time of the execution of the Power of Attorney, the principal was mentally competent and did have the capacity to understand the nature and significance of the Power of Attorney that he or she signed.  

Without this document, most title companies will hesitate to allow the use of a Power of Attorney for an individual with dementia, based on a fear that the Power of Attorney might in the future be declared invalid if it was executed after the principal lacked the capacity to make decisions. In the event of a future challenge to the validity of the Power of Attorney, the title company will want to prove that it properly vetted the validity of the document. 

So what can be done if the title company will not allow the use of the Power of Attorney and the individual is no longer able to make his or her own financial decisions?  

A guardian or conservator will need to be appointed by the court.   

A guardianship or conservatorship is not common, but it can be granted by the court when it finds that a person is totally or partially legally incapacitated. 

Since the procedure for obtaining a guardianship or conservatorship varies per jurisdiction, you should consult with an attorney if you are considering this possibility.