There is no small amount of strategy and thought that goes into buying or selling a home. One thing people often don’t even second-guess is whether or not they have the authorization to conduct a transaction in the first place. 

When selling property you own, your name has to be on the title, and any joint owners must agree to the sale. The situation becomes more complex when acting on behalf of someone else. If you’re selling or buying for a family member, or they are taking care of things for you, Power of Attorney is vital in either case. 

Disclaimer: Please use this post as information only rather than as legal advice. We are real estate agents, not lawyers. We recommend consulting with an attorney for your personal situation. With that disclaimer out of the way, here are a few facts you need to know about how Power of Attorney works in real estate. 

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What Is Power of Attorney?

Granting someone Power of Attorney (POA) gives them legal authority to act on your behalf while you are still living. This differs from an Executor (or Estate Trustee) who settles your estate after you have passed away. 

There are two main types of Power of Attorney in Ontario:

  1. Power of Attorney for Personal Care: This type grants the POA authority to make decisions regarding your personal well-being and medical care if you become unable to do so yourself. 
  2. Power of Attorney for Property: This authorization grants the ability for someone else to manage your finances and estate. In real estate, Power of Attorney for Property could mean selling your home or buying a new property on your behalf. Unless stated otherwise, this power begins as soon as the documentation is signed and witnessed. 

Non-continuing Power of Attorney grants authority over your finances for a short period of time, such as if you are on an extended vacation or prefer someone else to handle a real estate transaction for you. The agreement is null and void if you become incapacitated or if there is an expiry date, whereas a Continuing Power of Attorney remains in effect. 

In Ontario, one person can act as Power of Attorney for both Property and Personal Care. Otherwise, you can appoint two separate individuals. Alternatively, it is possible to have a POA for property and not personal care, or vice versa. 

Once you have the proper authority, a real estate agent can walk you through the steps to selling a house in Toronto. The posts below can also help:

What Does a Power of Attorney Do?

The role of a Power of Attorney is varied and far-reaching, regardless of what type you are assigning. A POA for Property can do nearly anything with your money and finances that you could do yourself. There are some limitations; for example, they cannot change your Will or assign themselves as the beneficiary to your life insurance policy. However, they can list your house for sale and close the transaction with the appropriate documents. 

Signing this amount of power over to someone else can be a frightening thought, especially if you value your independence. While there are protections in place to guard against a bad-faith player, you still want to give this decision careful thought. 

A POA is under a fiduciary duty to safeguard the best interests of the grantor at all times. Under these guidelines, they can manage your bank accounts by paying your bills, but they can’t help themselves to any funds or make a generous and uncharacteristic gift or donation without your permission. 

A POA can use your money to make investments. However, they must act prudently and in accordance with your wishes. You can also limit their authority by using strategic clauses and clear written instructions. An experienced estate attorney can help you draft a document that addresses all of your needs and concerns. 

Do you want a deeper understanding of how real estate works before buying or selling a house? The posts below will give you a solid foundation:

How to Change Power of Attorney in Ontario

Anyway you look at it, a POA is a role that requires a lot of trust and business prowess. This person should be both willing and able to fulfill all of the duties the grantor requests of them. 

Even when you make your selection, things can change over time. Later on, you might wish to revoke Power of Attorney altogether or assign the role to someone else. 

The main caveat to either option is that you must be of sound mind. Otherwise, you or a family member would need to apply to the courts to intervene. As with all steps in the estate planning process, early decisions are important. 

When necessary and the grantor is capable, cancelling a POA agreement is usually straightforward. You can contact your lawyer and either create a new Power of Attorney form, with a clause that states that all Powers of Attorney previously made are now null and void. 

Alternatively, you can create a formal Statement of Revocation, which must be signed and witnessed by two people. 

Upon changing or revoking POA, be sure to notify your banks and investment companies you have accounts with so they know that person no longer has authority over your finances. 

In both estate planning and real estate, Power of Attorney is a valuable tool when used correctly. With clear communication and the documentation to back up your wishes, buying or selling a home can be a seamless process. 

Our Midtown Toronto real estate agents are here for you for all of your buying or selling challenges. Reach out to us at david@batorigroup.com, bobby@batorigroup.com or call (416) 485-7575 with any questions.