Protect Yourself with Power of Attorney

Power of Attorney, Powerful Tool For Real Estate Investors

The Power of Attorney is a wonderful document, and especially useful in creative real estate transactions.  The owner of the piece of property (the grantor) appoints you (the grantee) his attorney (the person who can do things regarding the property).  The Power of Attorney can be revocable or irrevocable, general or specific for a fixed period of time, or without that limitation. In other words, the Power of Attorney is a very flexible document.


The Power of Attorney Is Useful in Many Real Estate Situations, Including:

1.   Renovation Before Possession

A real estate purchase where prior to closing, your contract allows you possession to do renovations that require third-party permissions, municipal permits for example. You want to be able to deal with the local municipality, contractors, insurance companies, anyone who would say, “I can’t talk to you, you’re not the owner on title”. At that point you produce the Power of Attorney drafted to give you the power you need to accomplish your renovations.

2.  Rent-to-Own

In a Rent-To-Own situation, the tenant buyer has the right to file against the title an official notice of their interest in the property. You might want to have a limited Power of Attorney to discharge your tenant buyer’s notice/caveat (should they file one at the Land Titles/Registry Office).  A collapsed Rent-To-Own deal often has a disappeared tenant buyer who has no interest in helping you recover your property, including discharging his notice/caveat. Your tenant buyer might be nervous about giving you a Power of Attorney. You could make this part of your Rent-To-Own required documentation and draft a limited Power of Attorney only for the purposes of discharging a notice/caveat in collapsed deal circumstances.

3.  Agreements for Sale

Perhaps the most important use of the Power of Attorney is in relation to Agreements for Sale where you control the property but you are not on title. In a low equity-no equity Agreement for Sale, you absolutely are better off with a Power of Attorney, which allows you to deal with buyers, joint venturers, lenders, condominium corporations, insurance companies and any other entity which may take issue with you as a non-titleholder giving them instructions.

There Are Downsides to the P of A:

1.  Sellers
Granting a powerful document like a P of A can make people nervous. They understand that they are giving away partial or full control of the property. You need to be able to make the case for why you need the P of A.

2.  Lenders
Banks especially are nervous about Powers of Attorney as they are a commonly used fraud document; it’s pretty easy to make up a P of A and forge the signatures of owners, witnesses, and commissioners for oaths or notaries. However, edgy as banks might be, it can be tough to exit or refinance an Agreement for Sale without a P of A.  You might have to defend the legitimacy of your appointment as attorney.  Luckily, other persons or entities involved in the property will be easier to deal with.

3.  Complications
A P of A is yet another document, and therefore another wrinkle in any deal. The details of a P of A need to be negotiated as they are not one-size-fits-all. Therefore, it will take a little more time and a little more money to get the appropriate P of A, although I firmly believe, in appropriate circumstances, it will be worth every penny.

Power of Attorney in Alberta Real Estate

We’ve updated the version of the P of A that we use in our Agreement For Sale deals here in Alberta. We have made two major changes to the document from its first introduction. The rules around Powers of Attorney are different in each province so you will need specific legal advice for the province you are doing business.

1.  The first big change is that we have made the P of A irrevocable. The last thing you want is for a seller to decide s/he doesn’t like you having the P of A anymore and s/he takes it away from you.

2.  The second big change is to provide a clause that allows you, as attorney, to transfer the property to yourself or to your agent. The Alberta Land Titles Act specifically requires those words or else you are limited to dealing with third parties. In an Agreement For Sale situation especially, there might easily be circumstances where you need to convey the property to yourself in order to enter into a contract with a third party buyer or where you need to do a refinance.

So, there you have it. Powers of Attorney are a great tool, providing flexibility and control in many real estate situations.

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Hand with Pen” image by Clker-Free-Vector-Images used under CC0 Public Domain.