Our firm assists clients with crafting their estate plan and helping them weigh their options based on their short- and long-term goals. One way we do this is by evaluating each client's specific situation and recommending the right type of power of attorney for their needs. We regularly draft general, durable powers of attorney, specific powers of attorney, and springing powers of attorney.
In this blog post, I will compare a general, durable power of attorney and a specific power of attorney as it relates to real estate transactions, which is a very narrow purpose for which they may be used.
The Code of Virginia § 64.2-1600, et seq., also known as the Uniform Power of Attorney Act, governs. Section 64.2-1600 defines a power of attorney as “a writing or other record that grants authority to an agent to act in the place of the principal, whether or not the term ‘power of attorney' is used.” That definition is broad, but it does not automatically grant the agent the power to always act in place of the principal without taking other steps first. One of those instances is when real estate is to be sold. Why is that? Section 64.2-1625 discusses the general powers granted to an agent regarding real property. The code section clearly states that a power of attorney generally authorizes an agent to “sell…” real property owned by the principal. However, when attempting to present a general, durable power of attorney during a real estate transaction, one may find other requirements imposed by the court, by the title company, etc., such as needing an original power of attorney and recording it in the appropriate jurisdiction.
On the other hand, a specific power of attorney is one which allows the principal to limit an agent's authority to a specific transaction. For instance, if you have a piece of property that you would like for someone to sell on your behalf, you may execute a specific power of attorney authorizing a person to act on your behalf regarding that transaction only. After the transaction is completed, the power of attorney is no longer valid.
Having the proper documentation in place before it is needed can save time and money for all parties involved.
These potential consequences are only examples, based on cases we have handled. Every case has its own unique facts and there are no guaranteed outcomes. If you or someone you know has questions about whether a power of attorney would benefit your situation, call our office at 757-967-8782 to schedule a consultation to discuss your situation.