Power of attorney is the label we use for a document that allows a person to appoint another person, called an attorney, to do things for him or her in case it becomes necessary or convenient. Powers of attorney may be divided into two categories: specific and general.
A specific power of attorney is prepared with a specific task in mind. For example, a person might appoint an attorney pursuant to a specific power of attorney to deal with the purchase of a newly built apartment from a developer because the completion date is uncertain and there is a possibility that the person will be out of town on the completion date.
A general power of attorney is prepared with the ideal of appointing an attorney to deal with all of the person's business and legal affairs. For example, a person that is planning on spending a lot of time outside of Canada might appoint an attorney pursuant to a general power of attorney to deal with his or her business and legal affairs in Canada.
General powers of attorney are often used in estate planning. This is the sort of planning we should all consider with respect to who will get our things after we die and who will be appointed to assist us if we experience a period of disability before we pass away. When general powers of attorney are used in estate planning, they are usually made enduring. This means that the powers of attorney will continue to be valid, and therefore the attorneys will be able to keep acting, even if the persons that granted the powers of attorney are mentally incompetent.
In the context of buying and selling real estate, there are two scenarios in which appointing an attorney pursuant to a power of attorney is particularly helpful: first, anyone purchasing new property from a developer and second, older individuals purchasing or selling any property.
First, when anyone signs a contract to purchase new property from a developer, he or she is advised that the completion date will be announced by the developer in the future. The actual date is not known. Since the actual date may be a few years in the future, the buyer may find that he is out of the country or otherwise not available when the actual date is announced. To deal with this contingency, it is a good idea for all buyers of new property from developers to consider appointing an attorney pursuant to a power of attorney so that there is someone in place who can sign documents on completion if the buyer is not available. I recommend a specific power of attorney and would consider making it enduring to cover off the possibility that the person making the appointment becomes mentally incompetent.
Second, when older individuals are purchasing or selling property it would be a good idea for them to appoint attorneys pursuant to powers of attorney when they sign the contract of purchase and sale. If they already have an enduring general power of attorney in place because of prior estate planning, then that will be fine and nothing more needs to be done. If not, then this could be the time to get such a document. Alternatively, if the people are not ready to appoint someone to act for them as an attorney generally, then a specific power of attorney can be prepared to ensure someone is available to deal with the real estate transaction. I recommend making it enduring to cover off the possibility that the person making the appointment becomes mentally incompetent.
Dominic Meslin is a lawyer with Quadra Legal Centre. Dominic works in the areas of wills and estates law, business law and real estate law. For 15 years, he has assisted clients with estate planning and administration, real estate conveyencing and business transactions.
Thanks for this insight, Dominic! We hope this information helps anyone who has questions about why power of attorney matters in real estate.
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