We currently live with MIL. We moved in with her 3 years ago because of her health (dementia) and she wasn't paying any bills. It was cheaper to move in with her than to try to maintain two homes. Here is my question... She has a second mortgage and we have been paying it and we also have POA over all finances. Can we sell the house? The mortgage company has a copy of the POA from over 2 years ago but that's the only involvement we have had with them. Do we have to have the house in our name to sell it?
The key to what you can do is the wording of the POA, whether or not it's contingent on a dementia or other incapacity declaration, and if so whether that exists.
How is title vested? Is it in your MIL's name alone? If the DPOA allows you to handle business affairs, including real estate ones, you can sell the house as her proxy. If you're uncertain, either ask the attorney who prepared it, or contact a realtor and raise the issue as to what they would require for sale; they'll ask the title company they use regularly whether or not it suffices for a sale.
Before doing anything though, how do you plan to invest the proceeds, which as her funds should be dedicated to her care? If Medicaid is a potential consideration, factor that in. Igloo is a Medicaid expert and usually posts on threads like this.
What contingencies have you considered for MIL's care for the rest of her life? I'm assuming since you wrote that you have two homes that she'll be moving in with you. Are there other options under consideration?
Whatever you do, the proceeds from sale of her house need to be reserved for MIL's care.
I agree with those below who suggested you consult with an attorney who is versed in elder law, estate planning and Medicaid before you do anything with the home. The lawyer can advice you properly on what to do with house sale proceeds. Don't make any assumptions! A 1 hour consult (although not cheap) can save you from a world of financial pain down the road.
Going forward until that time, be very careful how you sign any paperwork as PoA...there is a specific way it should be done/worded to ensure you avoid any personal responsibility (again, see lawyer).
You might consult a lawyer - just to cover your bases.
The POA my SIL has over her mom only grants SIL the power to carry out her Mom's wishes. So if mom didn't want to sell, you can't sell. (If you had Guardianship, that allows you to make decisions FOR her and then you could sell the house no matter what she wanted).
It depends on how the POA is worded, and might also depend on where you live.