What You Need to Know About Powers of Attorney
Oct 31, 2018 / Escrow
Not all Powers of Attorney are created equal. To provide you with a better understanding of the different types of Powers of Attorney and when they are needed, here are some of the most common.
General Definition of Power of Attorney
A Power of Attorney is a means by which the Principal authorizes and Agent or Attorney-In-Fact to legally undertake action on his/her behalf.
Power of Attorney Terms to be Familiar With
- Principal: The person who grants authority to another party to act on his/her behalf.
- Agent or Agent-In-Fact: The person given the authority by the Principal to act as his/her agent.
Specific Types of Power of Attorney
Limited/Specific Power of Attorney
This is the preferred type of Power of Attorney, as it grants only powers specifically outlined to the transaction at hand and no other authority is given. It also states the authority the agent will have, including specifically defining the property, whether or not this property is to be sold or encumbered and any other authorities that are being given. It is extremely important that this document is submitted as soon as possible to the title company so that it may be reviewed.
General Power of Attorney
This type of Power of Attorney is just as it states – general. It allows the Agent to make decisions on behalf of the Principal in all phases of all of their business, including the sale or purchase of real estate. It may also cover all property owned by the Principal and allow the Agent rights to managing banking and investments, operating a business and handling taxes. The appointment granted to the Agent may be for a fixed period and can be revoked at any time by the Principal provided the principal still has the legal capacity to do so.
Durable Power of Attorney
Other types Powers of Attorney will terminate if and when the Principal becomes unable to make decisions. But, the Durable Power of Attorney remains effective even if a person becomes incapacitated if it includes special wording that states that the power survives the Principal’s incapacity.
Other Things to Know about Power of Attorney
- They cannot be used to act on behalf of a trust or trustee.
- There is no Power of Attorney that survives the death of the Principal.
- Since title insurance requires that the Power of Attorney be recorded, the document must be notarized.
- If any documents regarding the sale or purchase of a home are signed out of the country, the signing must take place at an American Consulate.
- As with all complex legal matters, one should seek legal advice prior to making any decisions.
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