Power of attorneys can be durable or specific.
Real estate closings are the final process of real estate transactions. They bring both buyer and seller and their real estate agents or attorneys together to guide them through the settlement process. In exchange for money, sellers hand over their legal ownership through deeds to buyers. Most states allow either party -- buyer or seller -- to provide legal authority to a third party to sign their settlement papers on their behalf.
Power of Attorney
A power of attorney can be durable or specific. Also known as a general power of attorney, a durable power of attorney survives mental incapacity. A specific power of attorney is only effective for specific transactions. You may consider using a specific power of attorney for your real estate transactions, since you must generally revoke a durable power of attorney to terminate the principal-agent relationship. Moreover, many lenders may require you to use a specific power of attorney limited to signing documents on your behalf only for the real estate closing. By authorizing your agent to sign your financial documents, you become the "principal" for your agent and remain legally liable as the principal for your agent's acts.
Lender's Pre-approval
Generally, if you are a buyer in the transaction, you most likely borrowed money from a lending institution to finance your real estate purchase. If this is the case, then you'll need to obtain permission from your lending institution prior to settlement consenting to the use of a third-party power of attorney. When filing your settlement papers and recording your deed of trust, deed and mortgage instruments with the local land records clerk or circuit court, the settlement office will record your power of attorney form.
Forms
Many settlement companies will assist you in obtaining information about the power of attorney, since their interest is in finalizing the transaction. They may even provide you with a general power of attorney form for a fee drafted by their closing attorneys. However, some banks will require that you use their pre-approved power of attorney forms. You must have your power of attorney notarized prior to the settlement. Your agent will need to bring a valid form of identification to the settlement prior to signing documents on your behalf.
Power of Attorney Signatures
When signing real estate closing documents on your behalf, your agent must sign all of your closing documents as the power of attorney. Depending on your state's laws and real estate closing rules, your agent may have to sign each document using words denoting her role as a power of attorney. For example, most states require agents use language such as "Jane Smith, under a power of attorney from John Smith," "Jane Smith, attorney-in-fact for John Smith," or similar language.
Considerations
Since real estate laws can frequently change, you should not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.
