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Power of Attorney: What Agents Need to Know
By Barbara Pronin
Power of Attorney (POA) is commonly used in real estate transactions when one of the principals will not be available at closing or, in some cases, when one party to the sale is mentally incapacitated. Although it can be a powerful document, it may be open to misuse. As your title partner, here’s a primer on what we look for when a POA is in play.

What is it?
 
A POA is a written document in which one person, the principal in a matter, authorizes another person (the attorney-in-fact) to perform certain actions on their behalf. The POA may be “general” or “special,” durable or not, so when it is used for the transfer of real estate, your title agent will carefully review it to see what specific powers are being conferred and if they are sufficient for buying and selling real estate and executing deeds, mortgages or deeds of trust.
  • A general POA enables someone to act on the behalf of someone else in a variety of situations
  • A special POA outlines specific circumstances where one is authorized to act on the behalf of someone else (such as selling a home)
Durability
 
If the POA is durable, the capacity of the principal is not at issue, although there needs to be proof that the principal was competent when they executed the POA. Otherwise, if competency issues are involved, a physician’s statement may be necessary.

POAs in Question

Sometimes, the POA document meets underwriting guidelines, but its use is questionable. These instances may occur when there is a sense that the attorney-in-fact may be using the principal’s property for his/her own benefit, perhaps conveying the principal’s property to himself or mortgaging the property to himself. In such cases, an investigation is undertaken.

Validity Verified

When a general or universal POA is more than six months old, your title agent will check to confirm that it is still valid and has not been revoked.

POAs for Military

Military POAs are established by federal law. They may be used as a durable POA for real estate purposes, even though the form may not be identical to the form used in a given state.
 
A Final Word

A POA ends when a person dies. It is not a substitute for a will. As your title partner, we are here to address any questions you might have regarding this document.
 
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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