A power of attorney can often be a useful tool when a party is unavailable or does not have capacity to sign real estate documents whether they be transfer or mortgage documents. However, there are a number of pitfalls, including those discussed below, of which all parties involved should be aware to ensure that the transaction goes as smoothly as possible.
First, not all lenders will accept documents signed under a power of attorney. As a result, where mortgage documents are involved, it is best to consult with the lender early on to determine whether a power of attorney is an acceptable tool. In other cases, the lender may require that the power of attorney be prepared by a lawyer and be limited to the particular transaction involved. It is best to know these requirements ahead of time so that no problems arise when it is time to execute and register documents.
A second issue that arises with a power of attorney is dependent on who the property is being transferred to. A party who acts as the attorney under a power of attorney cannot transfer an interest in the property to themselves unless the power of attorney specifically contemplates such a transfer being made.
Third, a power of attorney must be properly drafted in order for the Land Title Office to accept it. It is important to try to get the power of attorney registered as early as possible to ensure that it meets the Land Title Office requirements. This can be done prior to the documents being signed by the attorney and, if possible, this is the best way to make sure the power of attorney will work.
Although powers of attorney can be useful tools it is important that they be prepared properly and that any applicable issues be considered to make sure the transaction proceeds as expected.
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637
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