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What are the legal considerations when buying or selling a property through power of attorney?
A power of attorney (POA) is a legal document that allows someone (the principal) to appoint another person (the agent or attorney-in-fact) to act on their behalf.
The agent has a fiduciary duty to act in the best interest of the principal when handling real estate transactions.
The type of POA used can determine the agent's level of authority - a limited POA may only allow the agent to handle specific real estate matters, while a general POA grants broader powers.
In most cases, the POA must be durable, meaning it remains valid even if the principal becomes incapacitated, to be effective for real estate transactions.
The agent must present the original POA document to the title company, lender, and other relevant parties to prove their authority to act on the principal's behalf.
If the principal is selling a property, the agent must ensure the sale price and terms align with the principal's interests, not their own.
For purchases, the agent must verify the property details, obtain the principal's approval on the offer, and ensure the purchase price is fair.
The agent must maintain meticulous records of all transactions and financial decisions made on the principal's behalf.
In some states, the POA may need to be recorded in the county land records to be valid for real estate transactions.
The POA can be revoked by the principal at any time, and the agent must cease all activity once notified of the revocation.
If the principal dies, the POA is automatically terminated, and the agent's authority ends.
Agents may be held personally liable if they breach their fiduciary duty or act outside the scope of the POA.
The principal should carefully choose an agent they trust, as the agent will have significant control over the principal's property.
Real estate professionals, such as title companies and lenders, may have specific requirements for accepting a POA, so the agent should be prepared to provide additional documentation.
In some cases, the court may need to appoint a guardian or conservator if the principal is incapacitated and does not have a valid POA in place.
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