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Power of Attorney 101: A Guide to Using a POA

By David Large, Staff Attorney

At Investors Title Company, we often see clients use a power of attorney (POA) to close a real estate transaction. A POA is a helpful estate planning tool to be used when a seller is alive and provides an avenue to get a deal closed when the seller is not available to sign at the closing of a real estate transaction. 

Under a POA, the “principal” is the creator of the POA who is placing certain powers in another person to act on their behalf. The person, whether it’s a family member, spouse or someone else, is appointed by the principal to act on their behalf with certain powers is called the “attorney-in-fact.”

Many clients of our residential title insurance company have come to us asking for information on how to navigate a property sale while using a power of attorney. Here are some commonly asked questions that our legal team has answered so you can be prepared to close on your next real estate transaction.

What Type of Power of Attorney is Right for Me?

While powers of attorney can be helpful in many situations — whether you’re buying a home or selling one — not all POAs are created equal. It is of vital importance that the correct type of POA is in place for a real estate transaction. 

There are two main types of POAs in the state of Missouri: 

  1. General Power of Attorney

When purchasing, selling or refinancing a parcel of real estate, a general power of attorney is the correct type of POA to use because oftentimes its terms include the power to buy and sell real property. 

  1. Health Care Power of Attorney

On the contrary, a health care power of attorney serves a specific function wherein you can set out your wishes for end-of-life care, burial plans, and who can make healthcare decisions for you when you are incapacitated. That is to say, a health care POA cannot be used for real estate transactions.

In order to avoid closing delays and last-minute rushes, please be careful to review which type of POA you submit to Investors Title Company to close on a real estate transaction. Or better yet, ask our legal experts to help you review your particular POA use case. 

Unfortunately, many times, we have seen a client submit a health care POA, not knowing that they will not be able to use this type of POA to close. By reviewing what type of POA you have in place, you can come prepared for a smooth and seamless closing.

What is a Financial Power of Attorney?

A financial power of attorney grants an individual the authority to act on behalf of a principal in the case of handling financial decisions. When it comes to financial POAs, there are two main types: durable and non-durable POAs. 

Durable Power of Attorney

A durable POA stays in effect even if the principal becomes incapacitated. Thus, durable POAs allow an attorney-in-fact to continue acting on behalf of the principal even if the principal is mentally or physically incapacitated. Generally, title companies require durable POAs to close. So when preparing to enter into a real estate transaction, please be sure to also review your POAs for language about durability. 

Non-Durable Power of Attorney

If a POA is not durable, it is not fatal to a transaction, but further requirements may be necessary to close a deal. As always, it is strongly encouraged to review your POA and to consult an attorney with any questions regarding POAs before entering into a real estate transaction. 

How Can Investors Title Company Help Me with Powers of Attorney Transactions?

By letting your Investors Title team know immediately that you may be using a power of attorney, you can save a lot of time and energy down the road. We can review the POA and ensure it’s right for your particular transaction.

Have questions on using a power of attorney or need help with your real estate transaction? Contact Investors Title Company today.