A Real estate Power of Attorney form (also “limited power of attorney”) is a legal document that wills the right to make legal and financial decisions that have to do with real estate to another person on your behalf temporarily until you are able to do so.
The property owner (principal) legally hands over rights involving selling, management, leasing, or refinancing said property to another individual (agent).
What is a Real Estate Power of Attorney?
A real estate power of attorney, also called Power of Attorney for Real Estate, is the owner’s willingness of all authority and rights over a property to another person. The real estate power of attorney often goes to the owner’s lawyer, who obtains the right to make legal decisions concerning the closing of a property. However, in certain instances, the property owner signs the real estate power of attorney to someone else when they themselves are indisposed.
- moving out of the neighborhood or state or country temporarily or permanently,
- unable to act due to health reasons,
- not technically equipped to handle the specific transaction(s); or
- residing in a place far from the property.
Who Can Have the Power of Attorney?
The property owner (the principal) can confer the real estate power of attorney to anyone or any entity (the agent), as long as the principal believes them to be capable of performing the legal roles and obligations in the principal’s best interest. Therefore, the principal should base their choice of agent on proven records of legal skillset and integrity, as well as prowess in closing real estate properties.
The agent can also be the owner’s close relative, friend, or associate. However, principals usually seek professionals such as real estate agents or a property management company to serve as their agents.
Uses of a Power of Attorney (POA)
A real estate power of attorney is one of such documents that can make real estate tasks easier and faster. The real estate POA is flexible and can fit into the principal’s particular needs. Sometimes, the principal requires their agent to carry out one real estate closing or procedure, and at other times, they may need the agents to complete several multiple tasks. The real estate POA gives room for these specifications.
NOTE: Real estate POAs can not be used to transfer the ownership of a property as these are only used to delegate the powers of the principal to act to the agent. For example, ownership rights in real estate are transferred by a deed.
The four main tasks of a Real Estate POA include:
- Property Management
- Property Refinancing
- Property Sales
- Purchase of a Property
For each of these primary tasks, there are basic objectives to carry out a real estate POA successfully:
- Collection of rent
- Rental agreements and signing
- Rent negotiation
- Tenant eviction
- Property renovation and repairs
- Arranging documents that the lender requires, such as certificates, notices, and closing statements
- Mortgage on property
- Closing funds withdrawal from principal’s account
- Closing funds delivery
- Sales execution
- Organization of important documents such as bills of sales and affidavits
- Handling of sales contracts and associated documents
- Recording of tax return
- Agreement on closing funds for property
- Payment of closing funds into the principal’s account
Purchase of property
- Purchase execution
- Sorting of associated contracts
- Handling documents such as bills of sale and affidavit
- Recording of tax return
- Mortgage payment
- Closing fund delivery
- Withdrawal of closing funds from principal’s account
How to Get a Power of Attorney
A concise stepwise guide on obtaining a real estate power of attorney includes the following:
The major parties involved in a real estate power of attorney are the agent, the attorney-in-fact, and the principal. The principal gives the power to the agent over multiple or single transactions in real estate deals over a property.
The legal document must state the situations in which a power of attorney takes effect. These may include property management, lease, or real estate closing. When the principal is the property owner/ seller, the attorney-in-fact may have the legal sign documents that concern the purchase of property, such as mortgage agreement, trust deeds, and settlement statements on the principal’s behalf.
This is usually a lawyer or someone with legal expertise that stands as a witness when the principal signs the rights and power of attorney to the agent. The notary public is a crucial witness that makes the document valid and legal.
In most states (e.g., New York), a POA is required to be signed in the presence of two adult witnesses. However, there is provision for an auxiliary agent if the first is unable to perform its functions, and this agent serves as a witness to the signing of the form. The rationale is to protect the (older or mentally impaired) principals from undue influence or abuse.
List details on property
The real estate power of attorney form must contain exact details of the property as this forms the legal description. The legal description is also the Lot Numbers and Tax Map; Book and Page Number; Parcel ID Number. The principal obtains this information from the city’s Accessor’s office or the Registry of Deed’s office.
Appoint an agent
The principal should select an agent based on trust and integrity. Accordingly, the principal must select their agent carefully and with the assurance that the agent is willing to represent the principal’s best interest.
The agent must be worthy of trust and have a basic knowledge of legal matters that pertain to real estate. In cases of a written will, the largest beneficiary should be the agent to reduce liability on other parties if the agent squanders or misuses property.
The terms of a real estate power of attorney are usually aligned with the principal’s wishes regarding the scope of authority and duration of rights that they will hand over to the agent. Here, the principal determines if this is to be a durable or limited POA.
An agent receives a durable real estate power of attorney when the principal can no longer perform cognitive duties or when they have terminal illnesses.
Note: Both parties must consider the state laws on real estate and follow the guidelines available to the state concerning durable real estate POA. Some states do not make provisions for durable real estate power of attorney.
Fill the form
When filling a real estate Power of attorney form, you should consider the laws guiding POA in your state and follow them accordingly. Note that some states have specific guidelines concerning the duration of a real estate power of attorney and do not allow the principal to confer durable POA. In contrast, others include durable POA only in the state’s statutory form. Hence, acquaint yourself with state rules before filling out a real estate Power of attorney form.
Sign the form
When signing the form, the requirements vary from one state to the other. However, all parties must ensure that every requirement and detail is present in the form, and then the agent and principal will both sign the real estate power of attorney form. In addition, the notary public should be present for the form signing in order to ensure that the document is legal and acceptable across several states.
Some states and their laws include:
|Alabama||§ 26-1A-204||Alaska||AS 13.26.645|
|Arizona||No statute||Arkansas||§ 18-12-501|
|California||§ 4123(b)||Colorado||§ 15-14-727|
|Connecticut||Sec. 1-44||Delaware||§ 49A-301|
|Florida||§ 689.111||Georgia||§ 10-6B-43|
|Hawaii||Uniform POA Act, § 30||Idaho||§ 15-12-204|
|Illinois||755 ILCS 45/3-4(a)||Indiana||§ 30-5-5-2|
|Iowa||§ 633B.204||Kansas||§ 58-654|
|Kentucky||KRS 382.370||Louisiana||No Statute|
|Maine||18-A §5-901 to 18-A||Maryland||§ 4–107|
|Massachusetts||No statutes||Michigan||§ 700.5502|
|Minnesota||§ 523.24||Mississippi||Section 204|
|Missouri||§ 442.360||Montana||§ 72-31-339|
|Nebraska||§ 30-4027||Nevada||NRS 162A.480|
|New Hampshire||§ 506:7||New Jersey||§ 46:2B-11|
|New Mexico||§ 46B-1-204||New York||§ 5-1501B|
|North Carolina||§ 32C-3-303||North Dakota||Chapter 30.1-30|
|Ohio||§ 1337.04||Oklahoma||§ 58-1072.1|
|Oregon||§ 127.045||Pennsylvania||§ 5603(i)|
|Rhode Island||§ 18-16-3||South Carolina||§ 62-5-708|
|South Dakota||§ 59-3-12 & § 44-8-2||Tennessee||§ 34-6-109(3)|
|Texas||§ 752.102||Utah||No Statute|
|Vermont||27 V.S.A. § 305||Virginia||§ 64.2-1625|
|Washington D.C.||§ 11.94.050||West Virginia||§ 39B-2-104|
|Wisconsin||§ 244.44||Wyoming||No Statute|
Handover a copy to the agent
The principal must give the agent a copy of the completed document, serving as a reference. In addition, the principal and agent must have copies of this form and keep it as a witness for reference in future times if the need arises.
Uphold the terms upon starting the agreement
After signing the real estate power of attorney form, both parties must uphold all the terms in the document and agree to the consequences of breaching the contract. After they have met all the duties of the agreement, the parties should sign a revocation of power of attorney form.
Basic Contents of POA Form
The power of attorney document differs depending on the preferences and specifications of the principal.
However, every POA form should contain:
- The effective date of the document
- Appointment: This includes the legal names of both principal and agents alongside their mailing address and the consent from the principal party.
- Second agent: This party is present and agrees to step in when the first agent can no longer function. The agent must fill in their legal name and mailing address
- Real estate: A complete description of the property in question with a duration and revocation clause.
- Powers appointed: This portion of the form states the principal’s intention to will over their rights to the agent or the secondary agent. There are options to tick in the checkboxes for financing real estate, real estate purchase, real estate sales, or management of the real estate.
Following are some free downloadable templates for you:
Real Estate POA Forms by US States
Could POA be Revoked?
A principal can use a Revocation of Real Estate Power of Attorney form to revoke a POA at any time. This form is a legal document that gives the principal the right to revoke the power of attorney of an agent in writing and serves as a legal document that backs this decision.
The principal must adhere to all the state’s guidelines concerning the revocation of POA and fill all the necessary information on the form. They must also send a copy of this form to their agent as a reference.
In some cases, however, the principal may not have rights to this form. These cases include coercion or loss of cognitive functions due to grave illnesses or injury. Some states also withdraw the rights of revocation of POA in cases of incarceration of the principal.
In some states, the principal also has the option of destroying the POA in addition to the revocation form. However, they should avoid using POA destruction as a sole means of POA revocation.
If an agent no longer wants to serve a principal or function in that role, they should formally notify the principal and follow the steps in the contract if these are available. In addition, the agent must follow the state’s guidelines and submit a formal resignation letter to the principal stating their wish to discontinue as an agent.
Liability of a POA after the Death of the Principal
Usually, a power of attorney ends upon the death of the principal and alongside all terms of the contract. This means that the agent will let go of the legal rights of the real estate property and will be free of the obligations that come along with them. It is necessary to inform the agent as soon as the principal dies.
On the contrary, a successor agent should also be appointed primarily to ensure the continuation of the contract in case the original agent faces an undesirable accident or death.
- A real estate power of attorney form is a legal document that transfers the right to perform legal functions from the owner/ seller to another person.
- Necessary parties involved are the Agent, Principal, and Attorney-in-fact.
- A real estate power of attorney can be limited or durable.
- A principal can revoke a power of attorney using a Revocation of POA form, and an agent can quit using a formal letter
- A POA contract terminates upon the death of the principal.
- The conditions of a real estate power of attorney form vary from state to state, and all parties must obtain formal knowledge before signing the contract.