Power of Attorney for Real Estate

A Power of Attorney for real estate is used for the transfer of real estate, but if it is used incorrectly it may be unenforceable. It is not uncommon for a well meaning family member or other designee using this device to discover that they hold a worthless document. Don’t let this happen to you!

I’ve seen escrows delayed because of vague language that could not validate an intended transfer of the family home when large funds were hanging in the balance.

With a little planning and the right counsel you can have a clearly written and enforceable document that will satisfy even the toughest title officer. I must say at this point that I am not an attorney, and I’m providing this information to you with a strong recommendation that you always consult your legal counsel before signing any binding documents.

So what is a Power of Attorney anyway?

A Power of Attorney is a legal document that gives somebody else legal authority to enter into transactions and sign documents on your behalf. The other person’s signature is legally effective to the same extent as if you had signed the document. The person signing for you is called the Attorney in Fact, and they basically have the same legal ability to sign every document for you. Consider them your legal clone.

These rights that are given freely to another person can assist you if you’re unable to be physically present or if you become incapacitated or hurt in an accident. But they also legally bind you to anything that your designee signs in your name. There should always be careful consideration given to this responsibility, and trust is needed before you pass the duty of signing to another person.

A Power of Attorney for Real Estate is designed to be used for a very specific sale, purchase or transfer of real property. A Durable Power of Attorney gives the grantee rights to act for you even in the event you become incapacitated in the future. This is an important distinction that may be the difference between having a valid document and one that is deemed unenforceable. If the donor loses capacity to grant permission after the power of attorney has been created (for example, from Alzheimer’s disease or a head injury in a car crash), then the power will most likely no longer be effective.

California law requires that real estate transaction documents generally must be recorded. Recording requires that the signatures on the document be verified or acknowledged by a notary public. The notary will require a copy of the power of attorney form before acknowledging the attorney in fact’s signature on all of the documents. The county recorder will also require that a copy of the power of attorney form be recorded along with the real estate transaction documents.

Now that you know what a Power of Attorney is and how it is used, let me tell you how one can actually be considered unenforceable.

Beware if the Power of Attorney:

• Is vague and does not contain ample authority to enact the transaction. In many cases the title company will want a “limited” power of attorney restricting the rights to convey specific real estate (rather than personal property).
• Is being used in a self serving manner. Strange as it may sound, an example would be somebody trying to convey title to himself or herself as their own alter ego. It’s happened!
• Was prepared with an expiration date that falls before the intended closing date of the escrow.
• Carries a notary signature that is foreign and insufficient for the approval of the title officer.
• Is used by the grantor in a manner not consistent with how that individual holds the recorded title (vesting).
• Is intended for conveying title or encumbering property owned by a trust when the Trustee of that trust has no ability to delegate his or her authority as Trustee.
• Has not been approved by the lender in advance.

If you have a Power of Attorney and you intend to use it for the purchase or sale of real estate, take the important step and let the title company review and approve the documents before entering into a sale. It’s better to know going in that you can complete the transaction with the documents that you have in hand. Your real estate agent can assist you in this process, and it may just save you a lot of trouble in the future.