It is not uncommon in our globalized society to know of someone who spends the majority of their time working or traveling outside of the country. Although this type of lifestyle may seem adventurous and sometimes envy-inducing it can pose some issues when it comes to matters involving real estate and property. I have frequently encountered clients who need or want to travel outside of the country but also must sell or purchase property at the same time. These clients will often come to my office with a Power of Attorney that they have printed off a website and give full Continuing Power of Attorney to a spouse, child or friend to deal with their property and financial affairs while they are away. This “one size fits all” Continuing Power of Attorney may be beneficial cost wise but they do pose a risk to the client.
All too often as real estate lawyers we are warned to be cautious of real estate transactions done by way of Power of Attorney. The concern is that a Power of Attorney may not have been lawfully granted and that the transaction is fraudulent. However, another concern is in situations where the Power of Attorney is valid but that the attorney (the individual that has been appointed to handle the affairs of the Power of Attorney) has abused their power. When a person gives someone a Continuing Power of Attorney they give them power over all of their financial decisions. I have frequently encountered stories of a family member being appointed as an attorney and then draining the donor’s bank account and leaving the country with all of the money. My suggestion to clients is if they are planning to sell or buy property through a Power of Attorney to simply do a limited Power of Attorney rather than an unlimited Continuing Power of Attorney.
Most clients are familiar with a Continuing Power of Attorney and a Power of Attorney for Personal Care. The Continuing Power of Attorney governs the persons financial affairs, whereas, the Power of Attorney for Personal Care is utilized when a person gives someone else the legal authority to make decisions about the donor’s personal care. Many times people are not aware that the law permits an individual to place restrictions or limits on the Power of Attorney. For example, if an individual is selling their home while they are away he or she can appoint a family member to limit their authority to the following tasks: signing the Agreement of Purchase and Sale and any legal documents; speaking with the real estate agent and lawyer on behalf of the donor; contacting utility companies to read the meters and arranging for items in the home to be removed. In this scenario, provided that there are enough funds from the sale proceeds to close the transaction the attorney would not need to have access to the donor’s personal bank accounts.
A limited Power of Attorney can give the donor peace of mind knowing that his or her transaction will be handled and the potential of being duped by the attorney would be minimized. Of course, every situation is different and no Power of Attorney is the same. It is important that when you do find yourself in a situation where you must sell your property and require a Power of Attorney your first step should be a call to your lawyer and he or she may be able to help you draft a Power of Attorney that suits your needs.