A Specific Power of Attorney: What Happens When Someone is Not Competent To Sign Real Estate Documents

 

Lisa, a realtor from Livonia, Michigan asks,  “my seller’s husband needs to sign papers to close the home. However, he is not lucid. Their realtor said she will get him to sign a power of attorney to his son. Is this right or even legal?

Attorney in Fact

First, for a person to be legally bound by a legal document, they need to be lucid at the time of its signing. The person has to know as and understand the “extent of their boundaries,” which means that they have to know where they’re at and what they own, in order to give away their authority or assign that authority over to what we call an “attorney in fact.”  An attorney in fact is someone who agrees to  legally act on another person’s  behalf.

When A Home Seller needs to Have a Specific Power of Attorney

Regarding real estate, it gets a little bit more involved. The power of attorney needs to be a specific power of attorney. This means that the power of attorney has to address the specific transaction, the property address and what’s going to occur with the designated property.  You need to know all this in all real estate transactions that require a power of attorney.

So in our question,  if the home seller is not lucid, nobody can now obtain a power of attorney on the seller’s behalf.  Even the best realtor can’t do it either. You have to go to probate court.  If (the document) wasn’t executed beforehand, it’s no good. Nothing can happen without a probate court’s authority. The probate court will have to appoint a guardian or conservator for the seller.

I am sure there are quite a few parties that are going to be very upset about that situation. But that happens.

Real Estate, Title And Other Professionals

There are some really good real estate agents out there. But like in every profession, there are people who don’t have this experience or they’ve never encountered this particular situation before, and now they’re presented with it. So instead of  acting without proper knowledge, it is best to seek the right information from professionals. So the real estate agent that asked this did the right thing. She reached out to a real estate attorney. Eventually, the title company would have told the parties to  go get an attorney because there’s no way they’re  going to let a closing occur.  Even  if there was a closing and the specific power of attorney was not provided or obtained improperly,   this could create a legal issue that could be raised at a later time.  The seller’s realtor could be in a lot of trouble. The buyers could probably unwind that transaction, or maybe an heir to the seller could unwind the subject transaction. It can go both ways, but why would any person want to risk the legal exposure?

For additional information related to creating a Durable Power of Attorney in real estate, feel free to contact the attorneys at Soble Law or see more blog articles or our many youtube videos related to real estate, contracts, and finance.

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