What is a Real Estate Power of Attorney?

A Real Estate Power of Attorney (POA) details an arrangement whereby a party called the Principal will bring on another individual or entity called the Agent to aid them with their real estate affairs. It is a type of Limited POA, meaning that the decision making powers granted to the Agent are only applicable in the limited contexts provided in the form.

The Agent may be any person or any entity the Principal believes will perform their role in line with the Principal’s best interests. It may be wise to select an Agent who has proven skills effectively dealing with real estate affairs, although this is not necessary.

A close friend, family member, or an associate of the Principal are popular choices. However, many Principals seek the services of a professional entity (such as a property management company) or individual (such as a real estate agent) to act in the role of their Agent.

How to get a Power of Attorney for Real Estate

1. Appoint an Agent / Attorney-in-Fact

To start, the Principal will need to identify a person (or entity) they feel is trustworthy and capable of handling the tasks they would be assigned. So long the Agent is willing to carry out the responsibilities requested, they’re at least eighteen (18) years old, and understand all tasks required, they can be nominated as the Agent.

2. Fill out a Power of Attorney for Real Estate POA form from start to finish

The Principal will then need to fill out a the form from start to finish. The form used should be specific to the state they are in, as signing requirements vary from state to state. The document can be signed by hand or with eSign, a free electronic signing service.

3. Furnish the Agent with a copy of the agreement

After executing the agreement, the Principal must furnish the Agent with a copy of it for their reference. Both parties should store their respective forms in a safe place that they can easily access should they need to refer to it again.

4. Once the agreement starts, uphold all terms

Similar to other types of Power of Attorney, Real Estate Power of Attorney forms are legally-binding. Consequently, if either party does not uphold the terms of the agreement, they may face legal repercussions. It is therefore integral that both parties continually uphold any duties assigned to them and respect the rights of one another. When the agent has finished their duties (or the Principal wants to remove their powers), they should complete a Revocation of Power of Attorney form.

What can a Real Estate POA be used for?

A Real Estate POA is a versatile legal contract that can be used to help the Principal complete a variety of real estate tasks. One of the most substantial benefits of this form is that it can be adapted to suit the particular needs of the Principal. While some Principals only require their Agent to complete one real estate task, others require their Agent to complete multiple tasks.

The four (4) primary tasks a Real Estate POA may cover are:

1. Purchasing a property,
2. Selling a property,
3. Managing a property, and
4. Refinancing a property.

A number of more specific tasks are associated with these primary tasks, as the table below outlines:

1. Purchasing a property

• Executing the purchase
• Handling any associated contracts
• Organizing documents including affidavits and bills of sale
• Filing the tax return
• Attending to the mortgage
• Delivering the closing funds
• Withdrawing the closing funds from the Principal’s account

2. Selling a property

• Executing the sale
• Handling any associated contracts
• Organizing documents including affidavits and bills of sale
• Filing the tax return
• Accepting the closing funds
• Depositing the closing funds in the Principal’s account

3. Managing a property

• Collecting rent
• Negotiating rent
• Signing a rental agreement
• Evicting tenants
• Repairing the property
• Finding new tenants

4. Refinancing a property

• Mortgaging the property
• Organizing documents required by the lender such as closing statements, notices and certificates
• Delivering the closing funds
• Withdrawing the closing funds from the Principal’s account

It is the Principal’s choice whether they give the Agent broad or more specific responsibilities to handle. For instance, the Principal can either require the Agent to handle a task in its entirety (e.g. managing the sale of their property from start to finish) or only handle specific components of it (e.g. organizing the documents associated with the sale).

How is a Real Estate POA Revoked?

The POA can be revoked by the Principal at any time using a legal document known as a Revocation of Power of Attorney. This form acts to formalize the Principal’s decision to revoke the POA by making a written, legally-binding record of it.

Before proceeding, the Principal should be sure to check over any specific guidelines that apply to their state. On the whole, the creation of the Revocation of Power of Attorney will be quite similar to the steps listed above to get a Real Estate POA. The Principal will need to fill out all mandatory sections of the form, uphold any state signing requirements, and furnish their Agent with a copy of the form.

There are also some exceptions to the Principal’s ability to use this form that should also be kept in mind. Namely, if the Principal is pressured to use the form or if they become incapacitated, they will no longer be permitted to use it. Incapacity is generally defined as the inability of the Principal to make or convey their own decisions due to a serious illness or injury. However, some states provide a more broad definition of this term to include circumstances such as incarceration.

Destroying the POA is another option available in some states. While it may be helpful to do so in addition to using a Revocation of Power of Attorney form, it is inadvisable to solely use this method.

Should the Agent no longer wish to serve in their role, they should communicate this to the Principal in a formal manner. If the terms of the contract provide guidance about how the Agent should proceed, they should follow the steps provided. The Agent should be mindful of any state laws regarding the Agent leaving the POA and abide by them as appropriate. If the contract nor state laws provide any guidelines about what to do, in most cases, the Agent will be able to give the Principal a formal letter of resignation.

Does a Real Estate POA end upon death?

If the Principal dies, the Power of Attorney will end upon their death. The contract will terminate, and the Agent will need to relinquish any and all authority they have been bestowed to act on the Principal’s behalf. It is vital that the Agent is informed as soon as possible if the Principal dies so they are aware of the need to halt their duties.

In regards to the question of what will happen if the Agent dies, the outcome depends on a number of factors, as noted below:

Circumstances where the Agent’s death will cause the POA to end

• If the Agent is the sole Agent to the POA and no successor Agents have been named, the contract will come to an end if the Agent dies.
• If one or more of the POA’s provisions state that it will end in the event the Agent dies, it will end if such circumstances arise.

Circumstances where the Agent’s death will not cause the POA to end

• If the Principal has named one or more successor Agents in the form, it will endure in spite of the Agent’s death. In such circumstances, the successor Agent will take over the role of the original Agent, and the contract will continue as usual.