Power of Attorney: What Agents Need to Know

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By Barbara Pronin

You are days from closing when a death in the family calls your buyer across country – or your seller has slipped on the proverbial banana peel and is hospitalized for an unknown period. There are any number of reasons why one of the principals is unable to personally execute documents necessary to close. But a valid Power of Attorney (POA) may be all that is needed to save the day.

As you may know, a POA is a legal document that grants authority to one person (the agent) to act for another person (the principal). It authorizes the agent to make medical, financial and/or other decisions on behalf of the principal.

A POA for real estate transactions is a notarized legal document that gives a designated agent (sometimes referred to as an “attorney in fact”) the authority to sign documents to effectuate the sale or purchase of real property, or conduct other real estate business for your buyer or seller. The POA is useful when the principal is out of town or otherwise unavailable, is unable to look after his/her own real estate for a period, or lives far away from the owned property, requiring someone else to manage it.

If a POA is to be used in your transaction, the document should be provided to the escrow and/or title company for review and approval as soon as possible. As your title partner, we can offer the following additional information that real estate agents should know about the use of a POA:

If the POA is more than a year old, additional documentation in the form of an affidavit may be required
If it isn’t already, an original, notarized copy of the POA may need to be recorded in the same county where the property is located
A seller may not be able to use a POA if there is a recorded homestead
If the buyer is using a POA, and is applying for a loan, the lender will need to approve the POA
When title to the property is or will be vested in a trust, a copy of the trust should be provided to the title company to determine whether a POA can be used

It is important to note that the POA terminates upon the death of the principal, at which time the principal’s successors take over the management of his/her affairs.

If problems are discovered regarding the POA, closing delays should be anticipated. But if you have checked that the POA is in order and obtained its approval from the title company, you can expect that your real estate transaction will proceed more smoothly toward closing.

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy.

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