Using Powers Of Attorney To Buy And Sell Real Estate For Those Who Can't

By
Real Estate Agent with Keller Williams Realty 0575737

Elder CareLater in life with elderly parents needing to change their housing needs whether to downsize, move back in with family, or move to assisted living or nursing homes, family members need to assist them with their finances and selling or buying property. A Powers of Attorney form with each state governing their rules allows you to assist them. There are three main types:

  • General - gives general authority, and is often too vague for Title Company purposes
  • Special - authorized for very narrow authority to do a specific act. Sometimes called a specific power of attorney
  • Durable - specifically states that it is not effected by the principal's subsequent disability or incapacity

All of these are written instruments whereby one person, the principal, appoints another person to be his or her agent or attorney-in-fact for some particular purpose, and further provides for the agents powers and duties. The authority may not be extended beyond that which is expressly stated or which is necessary and proper to carry out the authority given. A very helpful tool to buy and sell real estate and most settlement companies prefer the durable power of attorney.

The power of attorney authority also can be severed from the principal and you need to know how that works too, like

  • expired under the terms
  • revoked by principal
  • death of principal, many do not realize this one but true
  • if the agent is the spouse, divorce or annulment of the marriage ends it
  • self dealing by agent where there is a conflict of interest, like benefit to them with the principal's property, conveying property to the agent, etc. any conflict of interest situation

Also a guardian of a person may not give a PoA to act for a principal, only a Court.

REALTORS cannot give legal advice as they are not practicing attorneys so rather than buying online PoA's it is more prudent to contact a licensed attorney in your state to draw up the proper paperwork.

There is also a "separate" Medical" Power of Attorney form should you need to make medical decisions for a loved one. An ENTIRELY different category.

Powers of Attorney powers and authority are not all that hard to implement and makes taking care of people a lot easier. Plan this ahead and you will do fine.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Vickie Slade 04/09/2011 10:54 AM
  2. Mike Wong 04/09/2011 02:00 PM
  3. Palm Properties l La Jolla Real Estate 04/10/2011 01:12 PM
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Rainmaker
1,818,116
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Gary, I work with many clients that have not thought about this at all.  Most understand and follow my advice.  It's my realatives that ignore me!

Apr 09, 2011 06:22 PM #10
Rainmaker
358,565
Sondra Meyer:
Star View Real Estate - Colorado Springs, CO
See It. Experience It. Live It.

Gary, very informative post.  I'd like to add that those that are in the military can get the Legal office to prepare powers of attorney, and wills, for that matter, at no charge.  If a POA is obtained prior to a deployment, it can make home buying and/or selling go a lot smoother.      

Apr 09, 2011 08:25 PM #11
Ambassador
1,590,793
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Richie: We certainly don't want to wait till the very last minute for this paperwork.

Russell: I am glad you are validating the need for this document. I see it all the time.

Vickie: A solution for the elderly family members for sure.

Kristin: The Power of Attorney helps out right at that difficult point in time, especially with parents.

Steve: That is a significant number of PoA's registered.

Sandy: The thing to do as you pointed out is to set them up ahead of time. Very wise move.

Mike: I haven't seen many people write about this either, although it can be helpful to all of us.

Sharon: Thanks and God bless you as well.

Mara: You got the scoop now : )

Willlam: Something to tell everyone I suppose. Better to do power of attorney before people are incapacitated. I hope they listen eventually.

Sondra: Great extra information that the military can do powers of attorney and wills through the legal office. A tremendous service for those who serve and I agree going overseas these are powerful tools at your disposal when buying a home.

Apr 09, 2011 10:41 PM #12
Rainmaker
724,943
Ann Hayden
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

Gary,

Great information!

Ann Hayden in Wildwood, MO

Apr 09, 2011 11:58 PM #13
Rainmaker
832,783
Marc Swartz, CPA, CA, Real Estate Broker
RE/MAX Vision Realty Inc., Brokerage, Direct: (416) 737-9800, Office: (416) 321-2228 - Toronto, ON
Toronto, Durham & York Regions, Ontario, Canada

Gary - People need to be extremely careful when signing powers of attorney as some people can and do misuse them. 

Apr 10, 2011 06:38 AM #14
Rainmaker
1,285,724
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Gary....great post with lots of good information.....I've used the specific a couple of time to close for a seller who was out of the country.....Nice!
Hope you have a great day!---Rob

Apr 10, 2011 07:33 AM #15
Rainmaker
254,308
Connie Goodrich
Keller Williams Realty - McKinney, TX
CRS ABR (McKinney Realtor)Texas

Congrats on the feature!  Many think that their POA will work for the real estate closing and paperwork in our area.  I have to get the title company quickly engaged with the paperwork to make sure the transaction is properly handled and recorded.  Also the lender will need to approve as you know so that path of investigation needs to be done in advance and not a last minute drill.  All the best Gary!

Apr 10, 2011 11:52 AM #16
Rainmaker
538,570
Robert Hammerstein
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate

Gary - A wonderful post and timely for people that are planning retirement homes... Thanks for this posting. I will be forwarding it.

Apr 10, 2011 12:49 PM #17
Rainer
88,732
Phil Hillerman
Crye-Leike Realtors® - Rogers, AR
Crye-Leike Realtors®

Great information about POA! We ask for a copy of the POA for our file when we are listing property just to verify they have the authority to sign the contracts.

Apr 10, 2011 12:58 PM #18
Ambassador
1,590,793
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Ann: Thank you.

Marc: A good word of caution on extending beyond their powers or misuse.

Rob: Out of the country is another perfect example.

Connie: Great point about the path of investigation on the PoA. Often necessitates a live phone call to the PoA person even if overseas. Often in the military deployed the commanding officer can validate it with a signature and rank.

Robert: As we head toward retirement and work with others we need to know about this mechanism.

Phil: Having the record is a good validation of the authority.

Apr 10, 2011 01:07 PM #19
Ambassador
1,333,169
William Johnson
RE/MAX Associates - San Diego, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

Good morning Gary, As more and more baby boomers come to retirement age, the P of A will be greatly increased in coming years. Families and guardians need to understand these options better and only an attorney can give this valuable advise and counsel. Great topic!

Apr 10, 2011 01:12 PM #20
Rainmaker
591,234
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Gary,

It's a great post!

POA is a great tool. I've used it many times, as a lender, as a partner, as a true buyer's agent and just once as the seller's agent.

As a true Buyer's agent with POA my fee was negotiated and not contingent on the purchase price. As a lender I've coached clients through the process. As a lender wholesale sources and title companies always required a "Specific Power Of Attorney" what you called "Speical." Once, just once a Air-force officer gave me POA to buy, sell and finance real estate. limited only by the requirement that his wife and I agree, I was as glad when he got home as his wife, never again.

I've also used POA to act as attorney in fact to speak for client's in hundreds of real estate ssituations. POA, attorney in fact should never be confused with attorney at law, a POA is much more powerful and doesn't require a license!

Don't just leave a POA with your fiduciary or spouse if real estate is involved! Your attorney may tell you a general one is good for every thing, by law he'd be right, but the lender and title company still won't accept them. Finally don't surprise the lender and title company!

POA's must be notarized, Military can be witnessed by their commanding officer and expatriates can use American Consulates.

Bill

Apr 10, 2011 02:07 PM #21
Rainmaker
111,122
Jerry Morse
The Morse Company - Janesville, WI
BBA,GRI

It can be a good idea, but comes with some major responsibilities.  You need to know what you could  be liable for.

Apr 10, 2011 02:22 PM #22
Rainmaker
201,730
Renae Bolton
Marketing 4 Realtors - Garfield Heights, OH
I'm your Professional Real Estate Marketing VA!

So, does this mean I cannot set up a PoA for my parent's house if I am a beneficiary on their life insurance?

~Renae

Apr 10, 2011 02:29 PM #23
Ambassador
1,043,602
Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

With so many military clients...sometimes the spouse is left in charge to pick out the home (as long as it has a garage lol) and while their spouse's are away they HAVE to have a POA to not only purchase a home but for other immediate tasks that need to be taken care of. 

Apr 10, 2011 03:40 PM #24
Rainmaker
521,099
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Thanks for the the informative post Gary.  I think I'll reblog this. 

 

Patricia/SEacoast NH & ME

Apr 10, 2011 06:09 PM #25
Rainmaker
522,089
Mary Douglas
United Country Ponderosa Realty - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

Hi Gary,  Good information!  Those POAs can alleviate many problems when buying and selling properties and also create problems, when the form "is not acceptable" to the title company or lender.  You're right,  it's always best to consult an attorney and once the principal is incapcitated, it's really too late to have them sign a POA at that time.

Apr 10, 2011 06:54 PM #26
Rainmaker
659,520
Realty Works Temecula
Realty Works Temecula - Temecula, CA
Real Estate, Temecula, Murrieta, Menifee

Gary:  Very important to get the specific power of attorney here in California!  Probably, the same for most States!

Apr 10, 2011 10:50 PM #27
Rainer
238,825
Daniel H. Fisher
www.FisherHermanRealty.com (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC

We use POA's for spouses who are unavailable at closing, for out of country sellers, sellers in poor health, and properties that are owned by multiple parties. Especially helpful for estates with multiple heirs.

Apr 11, 2011 10:14 AM #28
Rainmaker
314,220
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Thank you for a well written post. I think the greater challenge is initiating the conversation that precedes getting the power of attorney. And it is something that should be done, but for many and varied reasons- it is delayed. Once that is done, the rest is easy. Thanks for bring this up.

Apr 11, 2011 01:37 PM #29
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