The buying and selling of real estate does not always happen according to your schedule; therefore, it may be helpful to have a back-up plan, such as a power of attorney, in case you are unavailable to attend the closing and sign the transfer documents. While designating a power of attorney is a relatively simple process, it is essential that your documentation is not only correct, but that it is approved by those who are relying on it to complete the real estate transaction.
On Your Behalf
The purpose of a power of attorney is to designate another person to act on your behalf; this person is your attorney-in-fact. The transfer of real estate requires legally binding documents to be signed, some of which become a matter of public record. As such, your power of attorney document must include the proper legal language that allows your attorney-in-fact’s signature to carry the same weight as your own.
Accuracy and Approval
According to Todd Ewing, a long-time settlement attorney, one of the most common delays of a real estate closing is an improper power of attorney. In most instances, a real estate power of attorney is only valid if the original, notarized document is recorded in the real property records where the property is located. Additionally, it is prudent to have the document reviewed by the title agency or lawyer conducting your closing, as their approval is required before they will rely on it for transfer purposes. If they are unwilling to accept your power of attorney, your attorney-in-fact will not be authorized to sign on your behalf.
Duration and Permissions
To determine which type of power of attorney to use, decide how long you want to designate an attorney-in-fact, and how broad their permissions should be. There are three types: Durable, General or Specific. Durable power of attorney is designed to be effective until death, unless voluntarily revoked, even if you become incompetent or incapacitated. General power of attorney is essentially the same as a Durable, but expires if you become incompetent or incapacitated. Specific power of attorney is used to complete a specified task or transaction only, with no additional permissions.
Benefits and Precautions
When transferring real estate, it can be convenient to have an approved real estate power of attorney on file, especially if you are experiencing an illness, are travelling or are otherwise unable to attend the closing; however, beware of confusing terminology within your power of attorney, since you must be fully aware of the powers you are delegating. Be purposeful with your authorization and choose an attorney-in-fact that is trustworthy and will carry out your financial instructions properly.
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