Power of Attorney and Real Estate Transactions

In Victoria, with its significant elderly population and its many out-of-town investors, real estate transactions are often conducted by an Attorney acting under the authority of a Power of Attorney. There are a number of issues that arise when conducting a real estate transaction by Power of Attorney.

 

Buyers, sellers and real estate professionals should ensure that they review the POA document itself, for two principal reasons. First, all parties to the real estate transaction must assure themselves that the person claiming to be the Attorney is in fact the same persons named in a valid POA document. Second, it is critical that you ensure that the document itself authorizes the Attorney to do what it is that they intend to do, i.e. sign the listing agreement, enter into a Contract of Purchase & Sale, remove subjects etc. This is particularly important where the POA document sets out a finite, limited list of circumstances in which the person is authorized to act as Attorney.

 

In addition, Buyers and Sellers looking to avail themselves of a POA should examine the language of the grant of power in the context of the date on which the POA was executed. This is because Section 56(1) of the Land Title Act states that unless there is a statement to the contrary in the POA itself, for the purposes of the Land Title Act and the Land Title Office the POA expires three years after the date on which it is executed. While I will almost always advise clients to specifically exclude the effect of this provision, this statutory expiry date is often overlooked with the result being that the Attorney may find they are unable to use the POA on a purchase or sale because the three year term has expired.

 

Finally, when a Buyer is looking to arrange mortgage financing, it is important to note that many financial institutions will not permit their clients to sign mortgage documents by POA. Buyers must be aware of this possibility and know that if they intend to sign by POA, they should disclose this to the lender or mortgage broker when arranging their financing.

 

If you have any questions or concerns about Powers of Attorney and would like an opinion on their validity, or you have any other questions on any aspect of real estate law, please donÕt hesitate to contact me. Thank you for your time,