General information, not legal or tax advice

Selling a House From a Trust or Under a Power of Attorney in Tennessee

Not every seller is selling for themselves. A son may be handling the sale of his mother's home after she moved to assisted living. A daughter may be the successor trustee of her parents' living trust. A service member may be deployed with a relative signing for them. In each case the home can be sold, but the person signing needs the legal authority to do it, and the closing attorney or title company will want to see it.

This guide explains how a sale works when the home is held in a trust or when someone signs for the owner under a power of attorney. It draws on the Tennessee Code, the Consumer Financial Protection Bureau (CFPB) and IRS regulations. It is general information, not legal or tax advice. A Tennessee attorney can review your documents and tell you what applies to your sale.

Start with one question: who has the right to sign?

Before we talk about price or timing, we need to know who can sign the listing agreement, the purchase contract and the deed. It is usually one of these:

The owner. If the person named on the deed can make their own decisions and sign, they sign, even if a relative helps with everything else.
An agent under a power of attorney. The owner gave someone written authority to act for them. Tennessee calls that person the attorney in fact. They sign in the owner's name.
A trustee. If the deed shows the home is owned by a trust, the trustee signs for the trust.
A court appointed fiduciary. The CFPB notes that if someone becomes incapacitated without a power of attorney, a family member may have to go to court to have a guardian appointed, a process it calls lengthy, expensive and very public. In that case the court process controls the sale, so talk with an attorney first.
An estate. If the owner has died and the home was in their own name, the sale usually runs through the estate. My guide to selling an inherited home covers probate and the personal representative.

Pull a copy of the current deed early. It shows whether the home is in a person's name, a trust's name or both, and that answers half the question.

Selling under a power of attorney

What a durable power of attorney is

The CFPB describes a power of attorney as a legal document that allows someone else to act on your behalf. Under TCA 34 6 102, a power of attorney is durable when the writing says it will not be affected by the owner's later disability or incapacity, or that it becomes effective upon that disability or incapacity, or uses similar words. That language matters, because a power of attorney that is not durable may not be usable once the owner can no longer make decisions. The CFPB also notes a power of attorney can be used for short term purposes, such as a service member who is deploying and wants someone to be able to sell property while away.

Does it let the agent sell the house?

Read the document itself. Tennessee law lists a set of standard powers in TCA 34 6 109. One of them is the power to buy, sell, lease, maintain or otherwise deal with real property and to sign every instrument needed to complete the transaction, including deeds, closing statements and bills of sale. Under TCA 34 6 108, a power of attorney can include those powers by clearly referring to the statute, and the owner can add powers or delete any of them. So a document that says little about real estate, or that removes the real property power, may not be enough. The CFPB says an agent's authority is limited to what the document and state law allow.

Recording and the paperwork

Under TCA 66 24 101, a power of attorney authorizing the sale of real estate, and any revocation of one, may be recorded with the register of deeds. The same statute says that if an instrument conveying real property is not acknowledged before a notary or otherwise proved, the register may refuse to record it and no buyer is required to accept it. Tennessee's real estate licensing law, TCA 62 13 104, also exempts an attorney in fact acting under a duly executed and recorded power of attorney from needing a license to sell the owner's property. In Coffee County, deeds and related documents are recorded with the Register of Deeds in Manchester.

Give a copy of the power of attorney to the closing attorney or title company as soon as the home is under contract, or sooner, so they can confirm it covers the sale and tell you whether it needs to be recorded with the deed. Under TCA 34 6 105(c), the agent can also sign an affidavit stating they have no actual knowledge that the power has been revoked or ended by the owner's death, and that affidavit is conclusive proof for people relying on it in good faith. When the sale requires a recorded deed, the affidavit can be recorded too.

When a power of attorney stops working

The owner revokes it. The CFPB reminds owners they can revoke or cancel a power of attorney. A revocation can be recorded under TCA 66 24 101.
The owner dies. TCA 34 6 105 protects an agent who acts in good faith without actual knowledge of the owner's death. If the owner has died, stop and talk with a probate attorney before doing anything more with the house.
A court appoints a conservator. Under TCA 34 6 104, if a court later appoints a conservator or other fiduciary to manage all of the owner's property, the agent answers to that fiduciary as well as the owner, and the fiduciary can revoke or amend the power of attorney.

The agent's duties

Under TCA 34 6 107, an agent who acts under a power of attorney is a fiduciary and must account for what they do to the owner or the owner's legal representative. The CFPB lists four basic duties for anyone managing someone else's money or property: act only in that person's best interest, manage their money and property carefully, keep it separate from your own and keep good records. For a home sale, that means pricing from real comparable sales, depositing the proceeds in the owner's account, not your own, and keeping the closing statement and every receipt.

Selling the home to yourself or a relative, or for less than it is worth, raises extra questions. The standard powers incorporated under TCA 34 6 108 do not include making gifts or transfers without consideration, or changing a right of survivorship on the owner's property. TCA 34 6 110 allows gifts under some broad powers of attorney only in line with the owner's own history of giving, unless the document says otherwise. The CFPB lists making gifts the owner did not authorize as a common form of power of attorney abuse. If a family sale is on the table, get an attorney's advice in writing before signing anything.

Selling a house held in a living trust

Who signs for a trust

When a home is titled in a trust, the trustee signs. Under the Tennessee Uniform Trust Code, TCA 35 15 816, unless the trust document says otherwise, a trustee may sell trust property for cash or on credit at a public or private sale, make repairs and improvements, insure the property, pay taxes and expenses, grant an option and sign the contracts and other documents needed to do those things. Read the trust first, because it can limit or add to those powers, or require more than one trustee to sign.

In many living trusts the owner is also the trustee, so selling looks almost like any other sale; the owner simply signs as trustee. Under TCA 35 15 603, while a trust is revocable and the person who created it has capacity to revoke it, the trustee's duties are owed only to that person. When that person dies or can no longer act, a successor trustee named in the trust usually takes over. The trust document says when and how that happens.

The certification of trust

Title companies and closing attorneys do not always need the whole trust document. Under TCA 35 15 1013, a trustee may provide a certification of trust instead. It is signed by the trustee and notarized, and it states, among other things:

That the trust exists and the date it was created
Who created it, who the current trustee is and who the successor trustees are
The trustee's powers and whether the trust can be revoked
Which trustees must sign if there is more than one, and the conditions for a successor trustee to take over
How trust property should be titled, and that the trust has not been revoked or changed in a way that makes the certification wrong

It does not have to reveal who inherits under the trust. The statute protects a person who relies on a certification without knowing it is wrong, and TCA 35 15 1012 protects a buyer who deals with a trustee in good faith and for value. The same law also lets a title company or lender ask for more information to clear up anything unclear, so have the trust document handy anyway. Under TCA 66 24 101, a trust agreement, or a summary or abstract of it, may also be recorded.

When the trustee wants to buy

Under TCA 35 15 802, a trustee must run the trust solely in the beneficiaries' interests. A sale of trust property to the trustee personally, or to the trustee's spouse, children, siblings, parents or the trustee's own agent or attorney, is presumed to involve a conflict and can be undone by an affected beneficiary unless the trust allows it, a court approves it or the beneficiaries consent. If a family member who is a trustee wants to buy the house, that is a conversation for the trust's attorney before any contract.

The mortgage

If there is still a loan on a home that was moved into a living trust, federal law helps. Under 12 USC 1701j 3(d), for a home with fewer than five units, a lender may not use the due on sale clause because of a transfer into a living trust where the borrower remains a beneficiary. At a sale, the loan is paid off at closing like any other. My guide to selling a house with a mortgage covers payoffs and lien releases.

Is a seller disclosure required?

Tennessee's disclosure law, TCA 66 5 209, excludes transfers by a fiduciary in the course of administering a decedent's estate, guardianship, conservatorship or trust. It also excludes any transfer where the owner has not lived in the home at any time in the three years before the transfer. A power of attorney is not mentioned in that list, so a sale signed by an agent for a living owner may still need the disclosure statement or disclaimer under TCA 66 5 202 and 203 unless another exclusion fits. Ask your attorney which applies.

Even when the state form is not required, other duties remain. Real estate licensees must still disclose adverse facts they know about under TCA 62 13 403, and the federal lead based paint disclosure applies to most homes built before 1978. My seller disclosure guide and lead based paint disclosure guide explain both.

Taxes to ask about

These are general points from federal tax regulations. Ask a tax professional about your situation.

Living trusts and the home sale exclusion. Under 26 CFR 1.121 1(c)(3)(i), if a home is owned by a trust and you are treated as the owner of that trust under the federal grantor trust rules, you are treated as owning the home for the 2 year ownership test, and the sale by the trust is treated as your sale. IRS Publication 523 allows up to $250,000 of gain to be excluded, or $500,000 for a married couple filing jointly, when the tests are met.
Time in a care facility. Under 26 CFR 1.121 1(c)(2)(ii), if the owner became physically or mentally unable to care for themselves and lived in the home as their main home for at least 1 year in the 5 years before the sale, time spent living in a state licensed facility, including a nursing home, while still owning the home counts toward the residence test.

My capital gains guide explains the exclusion in more detail.

A checklist before you list

Get a copy of the current deed to see exactly how the home is titled
Find the signed power of attorney or the trust document and any amendments
Have an attorney confirm the document lets you sell, and whether anything needs to be recorded
For a trust, ask the attorney to prepare a certification of trust
Keep the homeowners insurance, utilities and taxes paid while the home sits empty
Gather the loan statement, the payoff contact and records of improvements
Keep every receipt and the closing statement for the owner's or the trust's records
Have proceeds paid to the owner's or the trust's account, and confirm wire instructions by phone using a number you already know

How I help

I do not give legal or tax advice. What I can do is prepare a free home value report from recent Coffee County sales, so the price you choose is one you can explain to the owner, the beneficiaries or the court. I work with your attorney and the closing company from the start so the right person signs the right documents, I can handle showings when you live out of town or the owner has moved, and I keep you updated in writing so you have the records your role requires. My guide on how to sell a house in Manchester walks through the steps.

Keep reading:

Fair housing note: I work with every buyer and seller and follow the same steps for everyone.

This guide is general information from public sources, not legal or tax advice. Laws and forms change, and every power of attorney and trust is different, so ask a Tennessee attorney and a tax professional about your situation.

Selling for a parent or a trust?

I am glad to walk through the steps with you and your attorney. Call or text me at (615) 497 1658, or request a free home value report below.

Common questions

Can I sell my parent's house with a power of attorney in Tennessee?

Often, yes, if the document gives you that power. TCA 34 6 109 lists a standard power to sell real property and sign deeds and closing statements, and a power of attorney can include it by reference under TCA 34 6 108, but the owner can also delete it. If your parent may no longer be able to make decisions, the document also needs durable language under TCA 34 6 102. Have an attorney review it before you list.

Does a power of attorney need to be recorded to sell a house in Tennessee?

TCA 66 24 101 allows a power of attorney authorizing the sale of real estate to be recorded, and the licensing exemption in TCA 62 13 104 refers to an attorney in fact under a duly executed and recorded power of attorney. Give the document to the closing attorney or title company early so they can tell you whether to record it with the deed.

Can a power of attorney sell a house after the owner dies?

No one should rely on it. TCA 34 6 105 only protects an agent who acts in good faith without actual knowledge of the owner's death. Once the owner has died, talk with a probate attorney; the sale usually runs through the estate or, if the home was in a trust, through the successor trustee.

Who signs when a house is in a living trust?

The trustee. Under TCA 35 15 816, unless the trust says otherwise, a trustee may sell trust property at a public or private sale and sign the contracts and documents needed. If the owner who created the trust has died or cannot act, the successor trustee named in the trust usually signs.

What is a certification of trust in Tennessee?

A notarized summary signed by the trustee under TCA 35 15 1013 that can be given instead of the full trust document. It confirms the trust exists, who the trustees and successors are, the trustee powers, whether it can be revoked and how property is titled, without revealing who inherits.

Do I need a seller disclosure if I am selling as trustee?

Possibly not. TCA 66 5 209 excludes transfers by a fiduciary in the course of administering a decedent's estate, guardianship, conservatorship or trust, and transfers where the owner has not lived in the home within three years. The federal lead based paint disclosure can still apply to homes built before 1978. Ask your attorney.

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.