Legal
Power of Attorney
A legal document that authorizes someone else to act on your behalf in financial or legal matters, including signing mortgage documents. If you cannot be present at closing, a power of attorney allows a designated person to sign for you. The document must be specific to the transaction and accepted by the lender and title company. Not all lenders accept power of attorney for closings, so check in advance.
Why It Matters
Power of Attorney carries legal significance in real estate transactions. Property law, contract law, and lending regulations all intersect when buying a home, and terms like power of attorney have specific legal definitions that affect your rights and obligations as a buyer or homeowner.
While real estate agents and lenders can explain general concepts, for questions about power of attorney that could have significant financial or legal consequences, consulting a real estate attorney is worth the $200-$500 cost. In some states, attorney involvement in real estate closings is mandatory.
Real-World Example
Legal issues related to power of attorney can surface during title searches, contract negotiations, or closing. Catching problems early is far less expensive than resolving them after you've closed on the property.
Pro Tip
If you're buying in a state that requires attorney closings (CT, DE, GA, MA, NY, SC, WV, and others), your attorney will handle power of attorney-related legal matters. In other states, consider hiring one independently for a review of your purchase contract.