Using a Power of Attorney For Real Estate Contracts

The use of a Power of Attorney in connection with real estate contracts and be a powerful tool, but care should be taken to avoid potential pitfalls. Here are a few common questions that Arizona real estate lawyers commonly face with regard to the use of the Power of Attorney in the real estate context.

Q. What is a Power of Attorney?

A. A Power of Attorney is simply a signed document that authorizes one person to act on behalf of another. A Power of Attorney is commonly used in Arizona real estate transactions when a party is not available to sign closing documents and wishes to designate another person to sign for them. In such cases, if a Power of Attorney must be used, it should be limited (Referred to as a “Special” or “Limited” Power of Attorney) to the discrete use for which it is intended. In most cases, an Arizona real estate lawyer should be consulted to make sure the Power of Attorney serves only the purpose it was intended for.

Q. Who are the parties to a Power of Attorney?

A. The parties are the principal (who grants the power) and the agent or attorney-in-fact (who gets the power).

Q. What is the scope of the given power?

A. This depends on what the document says. In most cases the principal should avoid a “General” Power of Attorney, which allows the agent to do anything the principal has the power to do. A Special or Limited Power of Attorney (described above), on the other hand, will allow the agent to do only what the principal requires to get the job done.

Q. How long does a Power of Attorney last?

A. Again, this can be controlled by what is stated in the document. If the written document does not specify an expiration date or event, the document generally remains in effect until it is revoked or until the principal dies or becomes incapacitated or incompetent. In most cases, an expiration date should be included in the document because even after a Power of Attorney is revoked it remains effective with regard to third parties who don’t know it has been revoked.

Q. What is a Durable Power of Attorney?

A. In some cases the principal wants the Power of Attorney to survive his or her disability. In such cases a Durable Power of Attorney is used to avoid the automatic revocation of the Power of Attorney upon the principal’s incapacitation or incompetence.

Q. Are there any special requirements for a Power of Attorney in Arizona?

A. Yes. In most cases the Power of Attorney must be signed by a witnesses not related to the principal and must also be notarized. Also, if the agent is to receive any compensation, this must be spelled out and separately initialed by the principal and witness. There are other requirements and harsh penalties, including possible criminal repercussions, so its a good idea to have an Arizona real estate lawyer help.

Q. How should the agent sign a document on behalf of the principal?

A. The agent should sign the principal’s name “by _____ (Agent) as his attorney-in-fact.”

As suggested above, you should be very careful before granting a Power of Attorney to someone else, or before agreeing to act on behalf of someone as their agent. Its always a good idea to seek legal counsel from an experience Arizona real estate lawyer before doing so.

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