A Power of Attorney (“POA”) for Property is a written document in which you give someone the power to make decisions about your property and finances if you become unable to make these decisions yourself. Another situation where a power of attorney may be necessary is when the person is not in Canada. Even though the person who is granted the power with respect to the property is called “attorney”, that person usually is someone close to the grantor such as spouse, child, or other close family of the grantor. No matter you are granting power to an attorney to conduct the real estate transaction on your behalf, you are the attorney, or you are dealing with a POA situation on the other side of the transaction, here are the things you need to be aware of.
Most real estate lawyers avoid representing for a client who is not the registered owner of the property due to the fraud risks. Even if the lawyer agrees to represent in this circumstance, a great amount of caution should be exercised. The lawyer should scrutinize the POA and confirm that the attorney has the power to purchase or sell a particular property. The lawyer should also make attempt to speak with the registered owner to determine whether she had revoked the Power of Attorney or whether she was mentally competent at relevant times.
In addition, most banks refuse lending to a party who is not the registered owner of the property, as the bank’s charge maybe found invalid if the real owner of the property is discovered subsequently.
But what would you do if you are buying from someone who is the attorney for the registered owner? First, your real estate lawyer will determine whether any mortgage lender involved in the transaction is willing to extend the funds where the vendor is acting through a POA, and on what terms. Your real estate lawyer will make the same inquiry of the insurer as well. Next, your lawyer will review the POA document to ensure that it meets the requirements at law and grants the power that can be relied on to complete the transaction. Then the lawyer should requisition the delivery of a registered copy of the POA. The lawyer should also exercise extra caution when reviewing transaction documents signed under the authority of the POA. If the insurer or the lender has other requirements, the lawyer should also take steps to fulfill these requirements.
Suppose, later you discover that the “seller” you were dealing with is an imposter, you should contact your title insurer to find out whether you are eligible for the coverage. You may potentially have a claim against the solicitor who were acting for you in the purchase transaction if it can be proved that the solicitor acted negligently and failed to carry out necessary steps to detect and avoid the fraud.
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