California Real Estate Practice Exam

Which of the following is NOT true if "A" has been given power of attorney for selling "B's" house?

1. "A" cannot sell the property if "B" has recorded a homestead on it.

2. Power of attorney must be recorded for "A" to sell the property.

3. Power of attorney is terminated if "B" is declared incompetent and unable to enter into a legal contract.

4. "A" may purchase the property, providing he/she pays a fair market value for the home.

The correct answer is: "A" cannot sell the property if "B" has recorded a homestead on it.

The assertion regarding the inability of "A" to sell the property if "B" has recorded a homestead is not accurate. A homestead does not prevent the sale of a property; rather, it indicates that the property is a primary residence that may receive certain protections regarding creditors and foreclosure. Therefore, even if a homestead is recorded, "A" can still sell the property on "B's" behalf as long as the power of attorney is valid and effective. Power of attorney must indeed be in effect and properly executed for transactions to occur. It is also important to note that if "B" is declared incompetent, the power of attorney is typically terminated, reflecting the principle that an individual must be competent to authorize another person to act on their behalf. Additionally, under certain conditions, "A" can purchase the property if it is done at fair market value, which helps prevent potential self-dealing conflicts.