A power of attorney is generally defined as an arrangement between the principal granting it and an agent that enables the latter to act on behalf of the former in some issues. For example, when a principal wants to appoint an agent to represent them in matters relating to real estate property, they can use a real estate power of attorney form.
A Real Estate Power of Attorney Form, sometimes termed as a POA real estate, is a legal document that enables a principal to appoint an agent to act on their behalf in matters relating to their real estate property.
This includes selling, purchasing, leasing, renting, mortgage servicing, paying property taxes, or managing real estate property on behalf of the principal.
Mary purchases a house with her husband, John. John is not feeling well and is currently hospitalized, and Mary is supposed to travel overseas for a couple of weeks for work. Mary does not want the house to go into foreclosure while she is away, so she prepares a real estate power of attorney and appoints her eldest sibling Jane as her agent. The sister will be able to make mortgage payments for the house while Mary is away and manage any other affairs of the property as directed by the principal.
Reasons for Using It
Several reasons may prompt an individual, especially a homeowner or business owner, to use a real estate power of attorney.
Some of the common reasons for using it include:
- When a principal holder is unable to handle their real estate transactions due to physical or mental incapacitation
- In situations where the principal is unavailable. For example, due to military deployment or while traveling overseas and their real estate transaction is due, then they may designate their property decision-making rights to a trusted agent to represent them in their absence
- If a principal is physically incapable of actively making decisions regarding their real estate assets, such as when they have been hospitalized or under other forms of medical care that constraint their ability to make decisions for themselves
- A principal may also use a real estate power of attorney when they need another person to handle specific parts of their real estate affairs on an “as needed” basis. For example, if the principal is not aware of the recent changes in their state federal laws and they feel that if they were to handle issues like mortgage serving, property tax payments, and leasing the property on their own, they would unknowingly violate any of the existing laws, they can appoint a competent agent to handle these affairs on their behalf
- A real estate power of attorney designation may also be used as a replacement for a property management contract to empower someone else to manage the principal’s commercial or residential property
How Does it Work?
A real estate power of attorney defines the limits within which an agent can act on the principal’s behalf. For example, most states will only allow an agent to carry out various defined activities, such as handling the principal’s real estate taxes, leasing their property, buying, or selling real estate assets, and managing the principal’s bank accounts and stocks.
However, the agent cannot decide the termination or transfer of property title unless there is special consent from the principal. The terms of the agreement, including what can and cannot be managed, the agent’s duties and responsibilities, the POA’s validity period, and termination terms, are all determined by the principal when the POA real estate is being established.
A POA real estate can be general and durable or limited in scope. In a general real estate POA, the agent has broad decision-making powers, meaning that they can act on all of the principal’s real estate dealings and transactions. The form can be created to be durable, implying that it will remain in effect even after the principal is mentally or physically incapacitated.
Limited terms for POA real estate may also be established, limiting the agent’s powers to only specific transactions and duties per the principal’s directives for the specified timeframe. While executing a limited power of attorney, most states require it to be signed in the presence of two witnesses or a notary public to be considered valid and legally binding. Once the real estate POA form is completed and duly signed, it can be used immediately.
How to Get Real Estate POA?
While qualified estate attorneys or lawyers usually draft a power of attorney, homeowners and business owners may also create it, so long as they adhere to their state-specific POA legislation and requirements and follow the proper steps. Besides, a POA real estate can be created as long as the principal understands the fullness and gravity of the document they are signing and they are not physically or mentally incapacitated.
The process for getting a real estate power of attorney is outlined below:
First, the principal must specify the property to which they want to delegate authority to their agent. They can do this by describing the property using its legal description and the county in which it is located. The legal description is either the Tax Map and Lot Numbers, Book and Page Numbers, or the Parcel ID Number. This information is usually obtained from the owner’s local town/city/county Assessor’s office. If not available, the principal can search for their local Registry of Deed’s office to obtain their property’s legal description.
Choosing the agent
Next, the agent should select a trusted person to act as their agent. The agent must have a good understanding of the real estate market and property laws and an ability to understand and execute the duties outlined in the real estate power of attorney form.
Deciding the powers
Once the agent has been selected, the next step is to decide what powers the agent will have. The real estate POA form must be clear and precise about what powers can and cannot be delegated. Most states will generally allow agents to act on behalf of their principal in limited ways, such as:
- To manage, sell or buy real estate property on the principal’s behalf
- To lease or rent out the property
- To collect rent and other payments owed on the principal’s property
- To pay real estate taxes and mortgages
- To make repairs on the principal’s property
- To sell or buy stocks, bonds, accounts, and other securities held by the principal in his/her name.
If the principal wishes the agent’s powers to be broader or more limited in scope, they should specify it on the form. It is also essential to specify the POAs’ start and end dates. In most states, the real estate POA is not durable. This means it will terminate upon the principal’s incapacitation, but the principal may choose to make their agent’s powers durable by completing a durable real estate POA form.
Writing the POA
The next step is to draft the actual real estate power of attorney form. The principal must review their state-specific laws regarding writing a POA real estate and ensure that they follow all the rules. In addition to conforming to state-specific real estate power of attorney rules, the person writing it should disclose the principal’s and agent’s identities, including their full names and addresses.
Signing the form
Depending on the state in which the real estate power of attorney is being executed, the document may need to be signed in the presence of two witnesses, and notarization of the POA real estate may be required. Consulting an estate planning attorney is also a great idea. They will help ensure the document contains all the relevant data and is authorized following the applicable laws and signing requirements. Once the document is signed, it is effective, and the principal can make copies of the authorized POA real estate and issue them to their agent and any other interested third parties.
Free Downloadable Forms
Following are some free downloadable forms for you:
When it comes to the execution of real estate power of attorney forms, each state has its requirements regarding how the document should be signed and whether or not a notary public and witnesses are required to be present.
The list below provides all the United States and their various real estate power of attorney signing requirements:
|AZ||Witness and Notary public|
|CA||Notary public and two witnesses|
|CT||Two witnesses and Notary public|
|DE||Notary public and one witness|
|FL||Notary publicand two witnesses|
|GA||One witness and Notary public|
|IL||One witness and Notary public|
|MD||Two witnesses and Notary public|
|MI||Two witnesses and Notary public|
|OK||Two witnesses and notarization recommended|
|PA||Two witnesses and Notary public|
|SC||Notary public and two witnesses|
|VT||One witness and Notary public|
|WA||Two witnesses and Notary public|
Real Estate Power of Attorney Laws
Real estate laws are generally applied to any transactions carried out under a real estate power of attorney form, and they vary greatly depending on the state in which the POA form is created and signed. The laws provide a guideline for which a real estate power of attorney form is created and executed. Still, they also protect the interests of all parties involved and ensure that all actions carried out under the POA are done with the principal’s best intentions in mind. Therefore, the principal and the selected agent must understand their state-specific POA real estate governing laws before signing the agreement. The table below provides all the US states and a link to their applicable real estate power of attorney governing laws.
For a power of attorney to be valid, the person conferring the authority must be within the required legal age, usually 18 years or above. They must also be mentally capable of making sound decisions and be able to communicate clearly and effectively. The principal must also understand the nature of the particular transaction and the value of assets being put into the agent’s care.
They should be aware of the powers they have designated to their agent. Real estate power of attorney laws does not allow agents to absolve themselves of their fiduciary obligations. Therefore, there is always no guarantee that the selected agent will carry out their duties in good faith. Therefore, the principal must select an agent they feel they can completely trust. However, note that the agent does not have to be a property manager or an attorney.
Practical Application of a POA
Real estate power of attorney is a legal document that bestows another person the power to manage real estate affairs on the grantor’s behalf. It is used when the grantor (i.e., the principal) cannot handle their property due to mental incapacity, illness, military service, confinement in prison, or other reasons. In addition, the durable real estate power of attorney is often granted when the principal has reached a stage when they no longer possess the long-term capability to make and enact their own decisions.
Frequently Asked Questions
Generally, anyone within or above the required legal age (18 years old for most states) can prepare a real estate power of attorney. However, if you want your real estate POA to be valid in all US states, it is advisable to get in touch with an attorney specializing in real estate laws to help you prepare the POA form.
The average cost for drafting a real estate power of attorney will vary depending on your location, how comprehensive the POA form is, and whether or not you are hiring the services of an attorney. However, the average cost for getting such a document falls anywhere between $200-$295. This can be considerably cheaper if you prepare the document yourself or use online downloadable real estate POA forms.
The principal usually determines when the POA begins and ends and outlines it in the form. However, suppose the start and end dates are not specified in the form. In that case, the date it is signed is considered the POA real estate start date. It will remain valid until the principal chooses to revoke it, becomes incapacitated (if it is non-durable), or the principal or agent dies. A court order may also terminate the real estate power of attorney.
The attorney-in-fact has either broad or limited authority, depending on what the principal has specified when drafting the real estate POA form. They can buy, sell, refinance, or transfer real estate on their principal’s behalf as a general rule. They may also be delegated the right to sign legal documents.