Importance of Having a Power of Attorney for Real Estate Transactions
When life takes an unexpected turn, having the right legal documents in place is essential. A Power of Attorney (POA) for property is an essential document for real estate transactions, especially when selling a house.
What Is a Power of Attorney?
A Power of Attorney (POA) is a legal document that grants another person, the “attorney,” the authority to act on behalf of the person giving the power, also known as the “donor.” The Power of Attorney specific to property can be general in nature or for specific matters. In real estate, for example, your chosen attorney can sign the Agreement of Purchase and Sale, negotiate terms, and complete the sale of your property when you are unable to do so yourself.
When You Might Need It
The scenarios requiring a POA are more common than many people realize. You may be unable to personally handle a home sale due to a serious illness, military deployment, or caring for a family member in another province or country. Without proper documentation, these situations can halt real estate transactions entirely, costing you thousands of dollars or forcing you to accept unfavorable terms due to time constraints.
Types of Powers of Attorney for Real Estate
A general power of attorney grants broad authority over your affairs, including real estate transactions. However, many people prefer the more focused approach of a limited or specific power of attorney. The limited or specific POA restricts the attorney to particular real estate matters, such as selling a specific property or managing rental properties.
The timing of when the power of attorney takes effect varies. A continuing power of attorney remains valid even if you become incapacitated, while a non-continuing power of attorney version becomes void if you lose mental capacity. For real estate purposes, a continuing power of attorney is typically used.
If you become incapacitated without a POA in place, your family may need to apply to the Ontario Superior Court of Justice for guardianship or to obtain a Certificate of Incapacity.
Legal Requirements
The Ontario Substitute Decisions Act, 1992 governs the POA and requires that:
- The document must be in writing.
- It must be witnessed properly (usually by two witnesses).
- It is clear about the powers being granted.
- You signed this while having mental capacity.
A POA only applies while you’re alive and ends upon your death.
Choosing the Right Attorney
When choosing an attorney, it is essential to consider their competence and availability. This person will manage a significant asset, so trustworthiness and sound judgment are essential. While some people appoint a spouse, adult child, or family member, the decision should prioritize relevant skills and reliability over personal relationships. It is also advisable to designate an alternate attorney in case the primary choice is unavailable.
Conclusion
A Power of Attorney for Property is a legal document used during significant financial transactions. You should review and update your POA regularly, especially after major life events such as marriage, divorce, or the death of your designated attorney. Make sure you notify all relevant parties, including your lawyer and key family members, of the existence of your POA, and ensure they know how to access it.
Delaney’s Law Firm is capable of providing you with guidance on preparing or managing this legal document. Contact our office today to get started.
The content on this post is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship.