Selling a Parent's House With Power of Attorney in Ontario: A Family Guide

Can you sell a parent’s house with power of attorney in Ontario?

Selling a parent’s house with power of attorney in Ontario is allowed when the right document is in place. The key document is a continuing power of attorney for property. Under the Substitute Decisions Act, 1992, that kind of power can let the attorney do anything with property that your parent could do if capable, except make a will. Ontario’s own power of attorney page lists maintaining or selling the house as an example.

That is the start, not the end. Before anyone signs a listing, three questions need answers:

1. Is your parent still capable of making this decision?
2. Does the document actually give authority to sell and is it in effect?
3. Is the house a matrimonial home, so that a spouse must also consent?

This post walks through each one in plain terms, then covers what happens if there is no power of attorney or if your parent dies before closing. It is general information. A lawyer must review the power of attorney document and the sale itself, because the wording of each document matters.

Two kinds of power of attorney

Ontario has two separate documents and families often mix them up.

Document	What it covers	Can it sell the house?
Continuing power of attorney for property	Money and property: bills, bank accounts, investments, the house	Yes, unless the document restricts it
Power of attorney for personal care	Health care, housing, meals, clothing and similar personal decisions	No

The personal care attorney may decide that your parent should move to long-term care. The property attorney then deals with the house. Section 32 of the Act, which applies to property attorneys through section 38 once a parent is incapable, says property must be managed in a way that fits the personal care decisions made by whoever has that authority. So the two attorneys need to talk to each other, especially when they are different people.

What makes it continuing. Section 7 says a power of attorney for property is continuing if it says so. It is also continuing if it shows the intention that it can be used while the grantor is incapable of managing property. A power that is not continuing is a different thing. Ask your lawyer which kind you have, because only a continuing power can be used after your parent loses capacity.

When it takes effect. Ontario’s page says an attorney for property can start making decisions immediately unless the document says otherwise. Section 7 also allows a power to start on a set date or when something happens. If the document says it takes effect on incapacity but gives no way to decide that, section 9 says it takes effect when the attorney is notified by a capacity assessor in the prescribed form or notified that a certificate of incapacity was issued under the Mental Health Act.

More than one attorney. If two or more attorneys are named, section 7 says they must act jointly unless the document says otherwise.

Conditions. A power of attorney can carry conditions and restrictions. Some say the house may not be sold. Others allow a sale only with someone’s approval. Read every page of the document.

How it was signed. Section 10 requires two witnesses. The attorney, the attorney’s spouse or partner, your parent’s spouse or partner, your parent’s child and anyone under 18 cannot be witnesses. A power that does not meet these rules is not effective unless a court declares it effective. This is one reason a lawyer checks the original document early.

Is your parent still capable?

Ontario’s mental capacity page says the law assumes adults are capable of making decisions until it is proven they are not. It also says people can be capable of one kind of decision and not another. Their capacity can also change over time.

If your parent understands the sale and its consequences, they can sign the listing, the agreement and the closing documents themselves. Family can still do the legwork. Many families prefer this route while it is available, because it keeps your parent at the centre of the decision.

When capacity is in doubt, talk to the lawyer before anyone signs. A formal capacity assessment for property is done by a capacity assessor, a health professional trained and qualified through the province. Ontario’s page says assessors set their own fees and the person who asks for the assessment usually pays, with financial help available to people who qualify. An assessment cannot be done if the person refuses, unless a court orders it.

What the attorney needs to show the buyer’s lawyer

Ontario land is registered through an electronic land registration system. When the transfer is signed by an attorney, that system has its own checks. Ontario’s Land Registration Bulletin 2009-01 sets them out.

The power of attorney is registered first. The bulletin says powers of attorney are registered in the land registration system. The original signed and witnessed power or a notarial or certified copy of the original must be scanned into that registration. The registration includes a statement that the power is still in full force and effect and has not been revoked.

A lawyer must review it with the attorney. Since the province’s real estate fraud changes, a document registered by an individual under a power of attorney needs a law statement. The lawyer confirms they reviewed the power with the attorney. The attorney confirms that:

• they are the lawful party named in the power
• they are acting within the scope of the authority it gives
• to the best of their knowledge, the power was lawfully given and has not been revoked

What this means for your family:

• Find the original document early. A photocopy may not be enough.
• Bring identification for every attorney who will sign.
• Expect the buyer’s lawyer to ask questions about the power. That is normal.
• Tell your listing agent at the start that an attorney is signing, so the agreement names the seller correctly and the timing allows for the lawyer’s review.

The duties of an attorney who sells

Selling a parent’s house is one of the largest decisions an attorney makes. Section 38 of the Substitute Decisions Act applies most of the duties of a court appointed guardian to an attorney once the parent is incapable of managing property or once the attorney has reasonable grounds to believe that.

Those duties, from section 32, include:

• acting as a fiduciary, diligently, with honesty and integrity and in good faith, for your parent’s benefit
• considering how a decision affects your parent’s personal comfort and well-being
• explaining the attorney’s powers and duties to your parent
• encouraging your parent to take part in decisions as far as they are able
• fostering regular contact with supportive family and friends
• consulting those family members and friends from time to time
• keeping accounts of all transactions involving the property

The standard of care depends on pay. An attorney who is not paid must use the care, diligence and skill of a person of ordinary prudence managing their own affairs. An attorney who is paid is held to the standard of someone in the business of managing other people’s property. Under section 33, an attorney can be liable for damages caused by a breach of duty.

Gifts in a will. Section 35.1 says a guardian must not dispose of property that they know is the subject of a specific gift in your parent’s will. Section 38 applies this rule to an attorney too. There are exceptions, including where the sale is necessary to carry out the attorney’s duties. If you know the will leaves the house to someone, raise it with the lawyer before listing.

Accounts. Section 42 lets the court order an attorney’s accounts to be passed. The attorney, the parent and certain other people can apply. Keep a clear record of the sale price, the closing statement, every cost paid and where the money went. A separate bank account in your parent’s name makes this far easier.

In practice, these duties point toward a fair and well documented sale. A written home valuation, open marketing and a clear paper trail help show the price was right for your parent.

The matrimonial home rule

This step is easy to miss. If your parent is married and the house is (or was at separation) the home they ordinarily lived in with their spouse, it is a matrimonial home under section 18 of the Family Law Act. The Act’s general definition of spouse covers two people who are married to each other.

Section 21 says no spouse may dispose of or encumber an interest in a matrimonial home unless one of these applies:

• the other spouse joins in the document or consents to the transaction
• the other spouse released their rights in a separation agreement
• a court order authorized it or released the property
• both spouses registered a designation of another property as their matrimonial home and it has not been cancelled

A sale that breaks this rule can be set aside, unless the buyer acquired it for value, in good faith and without notice that it was a matrimonial home.

This applies even when the house is in one name. Picture this case. The house is in your father’s name. He has moved to long-term care and you hold his continuing power of attorney for property. Your mother still lives there. The house can still be a matrimonial home. If it is, your mother’s consent is needed for the sale. A power of attorney from your father lets you act for him. It does not give her consent. Your lawyer will confirm whether the rule applies.

When the other spouse cannot consent. If your mother is no longer capable of giving consent either, section 23 lets a court authorize the sale where the spouse whose consent is required is not capable of giving or withholding it. Whether an attorney acting for the incapable spouse can give that consent under their own power of attorney or whether a court order is needed depends on the documents. That is a question for the lawyer at the very start.

The spousal statement. Section 21 also lets the seller sign a statement that the property is not a matrimonial home. Section 21(4) says a statement made by the attorney, on the basis of the attorney’s personal knowledge, counts as sufficient proof. The lawyer will ask the attorney which statement is true and the attorney must be sure it is.

When there is no power of attorney

If your parent can no longer manage property and never signed a continuing power of attorney, nobody in the family can sign for them yet. Ontario’s guardianship page describes two routes.

Route	How it starts	Who ends up deciding
Court appointed guardian of property	An application to the Ontario Superior Court of Justice under section 22	The person the court appoints
Statutory guardianship	A capacity assessment under section 16 finds your parent incapable of managing property	The Public Guardian and Trustee, unless a spouse, partner or relative applies to replace it under section 17

The court route. Any person can apply under section 22. The court will not appoint a guardian if a less restrictive option would meet the need without a finding of incapacity. Ontario recommends consulting a lawyer for this route.

The statutory route. A person asks a capacity assessor to assess your parent. The request must be in the prescribed form and must state that the person asking has made reasonable inquiries and knows of no continuing power of attorney covering all your parent’s property and no relative who plans a court application. If the assessor finds your parent incapable of managing property, they issue a certificate of incapacity. The Public Guardian and Trustee becomes statutory guardian of property as soon as it receives a copy. Under section 15, the same happens when a certificate is issued under the Mental Health Act for a patient of a psychiatric facility.

Replacing the Public Guardian and Trustee. Under section 17, a spouse, partner or relative can apply to the Public Guardian and Trustee to replace it as statutory guardian. Ontario says the office reviews the suitability of the applicant.

Either way, Ontario says you will need a management plan explaining how you will manage the property. You must follow it. Conditions may be imposed. Under section 31, a guardian of property can do anything with property your parent could do if capable, except make a will. Ontario notes that a guardian cannot sell property that is the subject of a specific gift in a will, subject to certain exceptions.

Both routes add steps that a valid power of attorney avoids. If your parent is still capable today, talking to a lawyer about a continuing power of attorney now can save the family this process later.

If your parent dies before the sale closes

Section 12 of the Substitute Decisions Act says a continuing power of attorney is terminated when the grantor dies. From that moment the attorney cannot sign anything for the house, even if a sale is already firm.

Authority passes to the estate trustee named in the will or to the person the court appoints. The estate may need a certificate from the court before the house can be transferred. Our post on selling a house before probate in Ontario covers that step. Our guide to selling an estate home in Toronto covers the wider process.

If your parent is unwell, ask the lawyer at the outset what would happen to a firm deal if your parent died before closing. It is a hard question, but it is better answered early.

Tax on the sale

If the house was your parent’s principal residence for every year it was owned, the gain is generally not taxed. The Canada Revenue Agency still requires the sale to be reported on Schedule 3 of your parent’s return, with the principal residence designation. Form T2091(IND) is also part of the reporting.

The CRA says a late designation can be accepted in some cases, but a penalty may apply. The penalty is the lesser of $8,000 or $100 for each complete month from the original due date. As attorney, make sure your parent’s return for the year of sale includes this. If the house was not the principal residence for every year or there was another property, talk to an accountant.

Practical steps and timeline

There is no set legal timeline for this kind of sale. The order of steps matters more.

1. Find the documents. Locate the original continuing power of attorney for property, the power of attorney for personal care and, if possible, a copy of the will.
2. See a real estate lawyer. Have them confirm the power is valid, in effect and allows a sale. Ask about capacity, any gift of the house in the will and the matrimonial home rule.
3. Settle spousal consent. If the house is a matrimonial home, plan how the other spouse will consent or whether a court order is needed.
4. Register the power. Your lawyer arranges for the power to be registered in the land registration system before closing.
5. Value the house. Get a written opinion of value and keep it in the attorney’s records.
6. Prepare and list. Clear, clean and stage the house. Our Toronto downsizing guide covers this work. Our post on who helps with downsizing in Toronto lists the people who can share the load.
7. Review offers with the lawyer.
8. Close and account. Pay the proceeds into your parent’s account, keep the closing statement and record the sale in the attorney’s accounts.
9. Report the sale for tax. Make sure the year’s return reports the sale and the principal residence designation.

Questions to take to your lawyer

• Is this a continuing power of attorney for property and is it in effect now?
• Does it limit or forbid selling the house?
• Do all named attorneys need to sign?
• Is my parent capable of making this decision themselves?
• Is the house a matrimonial home and how will spousal consent be handled?
• Does the will leave the house as a specific gift?
• What happens to the deal if my parent dies before closing?

We work with families in this position often and we keep the attorney’s paper trail in mind from the first visit. When you are ready, contact us and we will plan the sale around the timeline your lawyer sets.