USING A POWER OF ATTORNEY TO BUY, SELL OR REFINANCE REAL ESTATE

USING A POWER OF ATTORNEY

It is not uncommon for clients to be away at the time they are closing a real estate transaction. In this situation there are a few options to ensure the transaction closes on time, one of them being the use of a Power of Attorney.

On this section of our website we discuss the pros and cons of using a Power of Attorney to sell, refinance or purchase a property.

In all of these situations we are assuming there are no trust issues between the person giving the Power of Attorney (the "Donor") and the person who is allowed to sign pursuant to the Power of Attorney (the "Attorney"), and all parties are acting in a professional manner. Giving a Power of Attorney to an untrustworthy person will result in serious difficulties.

USING A POWER OF ATTORNEY TO SELL PROPERTY

So long as the Power of Attorney is property drafted, there are very few issues with using a Power of Attorney to sell property. The Power of Attorney should be limited in terms of how long the Power of Attorney is valid, and to what purpose it is to be used. A general example is:

"To sell real estate legally described as (legal description of property) and any interest therein, in such manner as my attorney may think fit, and execute and deliver all documents and other instruments required for such purpose as my attorney may think fit.

This Power of Attorney shall expire on (insert date)."

USING A POWER OF ATTORNEY TO PURCHASE OR REFINANCE PROPERTY

A Power of Attorney can be used to purchase or refinance real estate, but you must check with the lender to confirm their willingness or requirements about using a Power of Attorney. Each lender has different rules regarding the use of a Power of Attorney.

At the time of writing this page, Scotiabank will allow a Power of Attorney but they require that the lawyer preparing the mortgage be the lawyer that prepares AND witnesses the Donor’s signature on the Power of Attorney. Our office recently completed a file where we prepared the Power of Attorney but the Donor was already in the UK so her signature was witnessed there. Scotiabank made an exception on this file to allow it to fund, but they advised that for future deals, the Donor either has to fly to B.C. to sign the Power of Attorney or Scotia will not do the deal. Obviously if the Donor has to fly to B.C. they could sign the documents on their own, and a Power of Attorney is not required.

RBC will allow a Power of Attorney to be used but RBC will insist on a title insurance policy, which has a minimum cost of $250.00.

TD will also allow a Power of Attorney except for equity takeouts, but have extensive requirements. They will require at least two days notice, information on the relationship between the Donor and Attorney, circumstances as to why a Power of Attorney is required, banking relationships, and knowledge of the Donor to the financing request. Even if all this information is provided and they approve of the Power of Attorney, title insurance will be required.

Rather than review all of the other lenders requirements, we suggest you (the client) contact the lender at the time of making the application. Lender requirements constantly change and even the above may change frequently.

If a transfer of the property to the Attorney is required as a part of the refinancing transaction, keep in mind that there must be specific wording in the Power of Attorney to permit this.

SUMMARY

Our goal is to remind you that a Power of Attorney can be used for out of town clients, but consideration should be given to the lender requirements for a refinance or purchase of property.

The information you obtain at this site is not, nor is it intended to be, legal advice.  You should consult a lawyer for individual advice regarding your own situation.

Copyright © 2010 by Spagnuolo & Company Real Estate Lawyers.  All rights reserved.  You may reproduce materials available at this site for your own personal use and for non-commercial distribution.  All copies must include this copyright statement.

DavidValente.com
Your Vancouver Real Estate Specialist