License to Sell and Power of Attorney

Question- I have Power of Attorney from my Mother and I am trying to sell her house. I have just been told I need a “License to Sell.” What does that mean and what should I do?

A License to sell Real Estate is often required by the Buyer’s Lender to make sure that the property for which they are providing a loan is being transferred on the “up and up” and that there will be no surprise such as a lien on the property from an old debtor or a deed from a previous sale/transfer that might contain an error or omission. A License to Sell does this by ensuring that the person who has executed the Purchase and Sale Agreement has the legal authority to sign the deed and that the clear title is being conveyed. This significantly reduces the chance of any subsequent legal action due to a too low purchase price or lack of authority to convey title.

The process to obtain a License to Sell begins with filing a Petition in the Probate and Family Court. All interested parties would be given notice of the proceeding and allowed the opportunity to object to the sale and to be heard by the Court. If there is an incompetent person involved, the Court also appoints a Guardian ad Litem (GAL) to represent that person’s interests since there is an assumption she lacks capacity to represent herself. In this case, we can assume that Mother is incapacitated which is why Daughter is operating under a Durable Power of Attorney and a GAL would then be appointed to represent Mother’s interests.

The Guardian ad Litem is usually an experienced attorney well versed in the area of probate and real estate law. Often his role is to investigate, evaluate and report in writing to the Court whether he assents or objects to the sale and whether it is in the best interests of Mother. In order to do this, the GAL usually confers and speaks with all interested parties, which in this example, would include Mother, Daughter, Listing Agent, Appraiser (if any). He would also review all Offers, the executed Purchase and Sale Agreement, MLS Listing page and appraisal report (if any). You can also expect the GAL to hire his own independent appraiser to determine the fair market value of the property using comparable sales, adjusted for location, square footage, condition of property, sale date and other variables. The GAL must also determine whether the sale is in the best interests of Mother and whether the proceeds of the sale will be used for her continuing care and comfort.

After the investigation is completed, the GAL would write and file a written report with the Probate Court with his opinion whether the sale of the property is in the best interests of Mother and whether he Assents to the Petition to Sell Real Estate. Depending upon the Court and the individual appointed Guardian ad Litem, this whole process can take from 1-3 months. Although it should be noted that this process can be expedited in an emergency situation such as a rate lock on a mortgage or if the deal is going to fall through for some other reason.

Should you find yourself in a similar situation and needing a License to Sell, we recommend conferring with an Attorney to make sure that Petition for License to Sell Real Estate is properly filed, the Assent of the GAL is expedited and otherwise help make sure that your real estate transaction is a success.

Frank Grimaldi has been practicing Real Estate Law for twenty-two years since graduating from the Northeastern School of Law in 1994. Contact Frank for help.