Getting into the real estate market or selling your home to move into a new one is never easy. It’s challenging enough to discover the proper buyers or even to advertise in the right way.
Trying to sell it with a power of attorney only complicates things further.
If you’re set on utilizing a power of attorney to sell your home, you’ll need to educate yourself with the new rules, regulations, and related paperwork, as well as have a thorough understanding of what powers of attorney are and how they can be used.
You’ve come to the right place if you’re seeking information on selling properties with a power of attorney. This article will explain what a power of attorney is and walk you through how to use one to sell your home.
A. General Powers of Attorney
To begin with, we will address the most common question, ‘What is general power of attorney?’
A general power of attorney is used by someone who wants someone else to make financial choices on their behalf, with specific or limitless authority, until their death or incapacitation.
If the principal’s mental state has deteriorated to the point where they are unable to make sensible decisions, a general power of attorney is no longer legitimate. It can only be utilized in the event of disability, inconvenience, unavailability, or when a person cannot manage their financial affairs on a day-to-day basis.
The principal is the one who implements the attorney, while the “attorney in fact” (AIF) is the person or organization who is appointed. A power of attorney authorizes an agent to act only to the extent that the power of attorney allows.
A general power of attorney offers numerous advantages, including the ability for the principal to make financial and property-related decisions without having to go through time-consuming and costly court proceedings.
B. How to Sell a House Using a Power of Attorney
Whether you are investing in a house or selling one that you have built, you need to understand how a power of attorney (POA) is used to make a real estate transaction. The first thing you need to find out is the type of power of attorney involved.
An EPA (Enduring Power of Attorney) governs property and financial decisions, and it takes effect if you lack mental capacity or want someone to intervene on your behalf.
An EPA is still valid if you have created one or signed one before 1st October in 2007 – after which Lasting Powers of attorney replaced it.
Lasting Powers of Attorney (LPA) give the attorney in fact (AIF) the authority to make choices concerning your finances, health, and care. It’s only valid when the principal has lost mental competence or refuses to make independent decisions.
It’s an excellent long-term strategy.
An ordinary power of attorney gives someone the authority to make financial choices on your behalf. When the principal retains mental capacity but requires temporary cover or cannot act on their own, this takes effect.
1. The Register of Deeds
A power of attorney for real estate must be recorded in the register of deeds to be effective. So, if a specific power of attorney is being prepared, it must be filed with the closing deed in the county where the property is located.
There are a few things to keep in mind when drafting a general power of attorney. First and foremost, it must use the correct language and expressly indicate that the attorney has the authority to act in real estate matters.
Secondly, like any other powers of attorney used to make real estate transactions, it must be recorded in the register of deeds.
2. Give an Advanced Notice to Avoid Delay
The most important thing to remember when using a power of attorney to complete a real estate transaction is to give advance notification. If the individual buying your house is taking out a loan, the lender must be notified of this, and the attorney must prepare the necessary paperwork.
Both the seller and buyer need time to review and approve the paper to check if all the requirements are clearly stated and based on their needs. So do not show up on the closing day with the POA and expect them to sign immediately, be certain that the closing will be delayed.
3. Property Insurance
You must notify the property insurance company by delivering a copy of your POA and requesting all relevant insurance policies. This will allow you to learn about any new regulations that must be followed in order to keep your property safe and secure.
If the insurance providers are aware that the property is constantly uninhabited, it will be easier to file a claim for insurance money if something goes wrong with the property, such as maintenance or break-ins.
4. Check for POA Restrictions
As an attorney, you must be aware of any limitations placed on the power of attorney by the principal. For example, unless a medical document declaring that the principal is no longer mentally capable of making their own decisions is produced, the power of attorney may not be effective.
When signing documents in real estate transactions, keep in mind that the names used should be of the principal, not you as the attorney.
C. Seek Professional Help
By now, you should have a good understanding of powers of attorney and how they are utilized to sell real estate. These pointers will lead you through the full procedure. Having said that, always seek professional assistance.
When drafting general powers of attorney for real estate, it is fairly typical for people to make simple mistakes. This can cause the transaction and closing procedure to be significantly delayed. Hence, hiring a good real estate lawyer is an excellent option.