Power of Attorney documents can be used in specific situations, such as real estate transactions.
A Power of Attorney (POA) is a well-known document in many estate plans. It is usually associated with assigning decision making roles and fiduciary responsibilities for end of life planning and other instances when someone is incapable of caring for themselves.
However, a power of attorney can be as broad or specific as the grantor sees fit.
Many general power of attorney documents cover real estate transactions. However, it is possible to restrict the power of attorney documents to that extent as well. A limited power of attorney grants many of the same fiduciary responsibilities, but is limited to a particular real estate transaction and specifies many of the pertinent terms (e.g. price, loan amount, interest rate).
Many real estate transactions require the title owner to execute listing agreements, contracts, addenda to contracts, deeds, settlement statements and other closing documents. Borrowers may need to execute loan and other closing documents. Both parties are typically present at the settlement of the sale or purchase of the property. Lenders and title insurance companies often require a specific power of attorney in order to close on the purchase or sale of real estate in the absence of one of the parties.
Real estate transactions often cannot be completed if certain parties are absent. For example, travelers, those serving abroad in the military, or anyone who is not able to look after their property may need temporary assistance in completing their real estate transactions. A power of attorney may be able to overcome the logistical difficulties presented in these situations. The individual who holds a real estate limited power of attorney (known as the “attorney-in-fact”) may be able to pay rent or a mortgage, sign a lease, or make a decision regarding potential tenants.
The attorney-in-fact is essentially the legal clone of the principal. This is the reason why powers of attorney of any type should only be granted to someone that the principal trusts implicitly such as family members, a spouse, or close friends. The grantor choses the scope of the power of attorney document, so it is possible to limit powers as necessary. Real estate transactions are just one limitation.
For more information on creating a power of attorney, please contact Kenneth F. Davies at WCS Law.