5 Ways Powers of Attorney go Wrong in Real Estate Transactions

A double-edged sword

Powers of Attorney are very useful estate planning documents. They appoint someone to help you with your legal and financial affairs.

There are a few common situations where clients might want to use a Power of Attorney in a real estate transaction:

a son or daughter is helping their parent sell their home and move into care
one spouse is signing for the other spouse, who works out of province, or in a remote area
one spouse is signing for the other spouse, who is no longer capable

But these documents are double-edged swords. People often use them in frauds and other suspicious transactions. They can also be invalid or terminated without anyone realizing it.

As a result, just having a Power of Attorney isn’t always a guarantee that it will be valid, or even usable.

Your document must meet certain criteria in order to be valid and useful. The organizations you are asking to rely on your document can simply refuse to accept it if they don’t feel comfortable with it. There is no legal requirement that a lender, insurer or registry must accept your document simply because you have it.

Here are five simple ways these important documents can go very wrong, and how that can derail or even completely end a transaction. If you want to use a Power of Attorney in a real estate transaction, make sure you get us the original as soon as possible, so we can vet it, verify it, get the appropriate permissions and then register it.

In this article, the word Adult refers to the person who made the document.

The word Attorney means the person whom the Adult appointed to help them deal with their legal and financial matters under that Power of Attorney.

Incorrect names

This is one of the most common problems we see with Powers of Attorney. The problems can arise either with the Adult’s name, or with the Attorney’s name.

Problems with the Adult’s name

The Adult’s name on their title must exactly match their name on the Power of Attorney.

Here are a few examples of names which do not match:

Robert John Smith may or may not be the same person as Robert J. Smith
Mary Jane Roberts may or may not be the same person as Mary-Jane Roberts
Catherine Allen may or may not be the same person as Kate Allen

The Registrars at the Land Title Office are extremely particular about this issue. It’s possible to use “also known as” for an Adult on a Power of Attorney, but only if you follow the specific guidelines set out by the Land Title Office.

What if the name of the Adult on the Power of Attorney doesn’t match the name of the person registered on title? Generally, we make a statutory declaration for the Attorney to sign, setting out that the different name variations in the document and the title are the same person.

However, it is always the Registrar’s discretion as to whether they will accept this statutory declaration. The Registrar can reject the document if the names are too different, or they are not satisfied that the Adult named in the document is really the same person as the person registered on title. If the Registrar rejects the declaration, the transfer will not happen.

Problems with the Attorney’s name

Attorneys need to sign the Power of Attorney before they can use it. They must sign the document in front of a notary public or lawyer.

The notary or lawyer who takes the Attorney’s signature on the document will ask the Attorney to provide their identification, so they can make sure the person signing the document is really the Attorney.

If there is a disconnect between the Attorney’s name as it shows on the document, and the name showing on the identification of the person appointed as Attorney, the notary or lawyer will likely make a statutory declaration dealing with the name difference.

This difference in names is less dangerous than a difference in name for the Adult, but still requires some kind of documentation to “connect the dots”.

Terminated or expired documents

A Power of Attorney can expire, or be terminated in a number of different ways. It’s not always obvious if this has actually happened. It can even expire or be terminated without the Adult or the Attorney even knowing that this has happened.

Your document can expire, or be terminated in many ways, including if:

the Adult dies
the Adult actively and purposefully revokes the appointment
the Attorney dies, or renounces their appointment
if the Adult and the Attorney are married, their marriage ends
the Attorney is bankrupt
the document itself has wording that says some version of “this appointment ends when …”
the document has a termination date built into it
the document is not an enduring Power of Attorney, and “expires” at the end of three years
if a court terminates the appointment
if a court appoints a committee (an adult guardian) for the Adult
the original document is missing or has been destroyed

It’s important for the people relying on the Power of Attorney to ask the Attorney for a statutory declaration stating that, to the best of their knowledge, these termination events have not occurred.

It is not possible to use a copy (even a certified true copy) of the Power of Attorney for a real estate transaction. You will always need the original document. We will need to register your document at the Land Title Office before we can use it.

Incorrectly made or signed Powers of Attorney

Powers of Attorney must meet certain requirements in order for them to be valid. If the document doesn’t contain these requirements, it can be unusable.

Here are some examples of how your document might be invalid for real estate transactions right from the start:

the Adult didn’t sign the document at all, or they signed it in front of the wrong people
the Attorney hasn’t signed the document
the document doesn’t meet the extra-jurisdictional requirements
the original document has been taken apart, making it impossible to verify whether it was tampered with
the Adult who made the Power of Attorney was not capable when they made the document
the document has no clear effective date
the person named as the Attorney doesn’t meet the requirements about who can act as an Attorney

Sometimes these problems can be fixed. In other cases, the problem could be insurmountable, and the Power of Attorney is simply invalid.

It’s important for clients to bring us their original document as soon as they possibly can when they are dealing with real estate transactions, so we can review them and make sure they do not contain any of these issues.

Out-of-Province Powers of Attorney

Powers of Attorney which you intend to use in the BC Land Title Office must meet the legal requirements set out in the Land Title Act, the Power of Attorney Act, and the guidelines set out by the Land Title and Survey Authority.

Enduring Powers of Attorney made outside of British Columbia (called extra-jurisdictional Powers of Attorney) do not automatically comply with these requirements. In fact, there are even more special requirements for enduring, extra-jurisdictional Power of Attorney documents.

Not all extra-jurisdictional Powers of Attorney are acceptable for use in BC. Only documents made in the rest of Canada, the USA, the United Kingdom of Great Britain and Northern Ireland, Australia and New Zealand can be used. Documents from places other than these will not be considered. For example, a Power of Attorney made in Mexico would not be acceptable for use in British Columbia.

These requirements can include:

special signing requirements for an Adult or an Attorney signing out of the province
certificates required from extra-jurisdictional practitioners
additional witnesses
witness declarations

Let us know immediately if you have an extra-jurisdictional Power of Attorney.

Lender and other third party refusals to accept the use of the Power of Attorney

Not all lenders will allow you to use a Power of Attorney when buying a new property. People have repeatedly used Powers of Attorney to carry out frauds. This makes lenders very wary when a client wants to use them.

If you are getting a mortgage, you need to let your lender know as soon as possible that you intend to use a Power of Attorney. It’s important to disclose this right away so you don’t waste time getting qualified for a lender that ultimately refuses to go through with the loan because you are using a Power of Attorney.

In some cases, title insurers will also refuse to provide coverage to transactions. They will want to satisfy themselves that the Power of Attorney is valid and being appropriately used.

Lenders and title insurers will ask the following questions if you want to use a Power of Attorney in a real estate transaction:

is this an authorized transaction?
where is the Adult, and why aren’t they doing this themselves?
have you disclosed the use of the Power of Attorney to everyone involved?
are you doing this transaction for the Adult’s benefit?
is anyone else benefitting from this transaction?
has anyone altered, revoked or otherwise terminated the document?
are there any restrictions in the Power of Attorney?
do you have the original Power of Attorney (not a copy of it)?
does the notary or lawyer representing the client using the Power of Attorney actually know the client?

In conclusion

Lenders and title insurers will ask quite a number of additional questions when you use a Power of Attorney in a real estate transaction. They will ask for additional documentation, and even require opinions on the validity of your document.

Remember that there is no legal requirement for anyone else to automatically accept your document. Using a Power of Attorney will always take additional time, require additional documentation, and additional steps to verify identities and determine that no elements of fraud or suspicious transactions are occurring. This will always result in additional costs.

The Manufactured Home Registry, the Personal Property Security Registry, the Westbank First Nations or any other First Nations band using Indigenous Services Canada all have separate and different requirements for using a Power of Attorney.

Please make sure to get the original Power of Attorney to us as soon as possible, so we can get the process of vetting, verifying and registering it done as soon as possible.