Common Mistakes of Power of Attorney for Real Estate or Land Purposes
Generally speaking, in British Columbia, a Power of Attorney is effective as long as it is prepared in accordance with the Power of Attorney Act of British Columbia. Having said that, the Land Title Office of British Columbia has specific requirements when it comes to dealings with real property using a Power of Attorney. In order for the Land Title Office to accept documents signed by way of a Power of Attorney such as a transfer form transferring title or a mortgage form granting a mortgage to a lender, the original or certified copy of the Power of Attorney must first be filed. If the Power of Attorney does not meet the requirements of the Land Title Office, it will not be accepted for registration and therefore not effective for land purposes. Any documents signed with the related Power of Attorney will not be accepted and an attorney may not be able to sell, purchase, mortgage or otherwise deal with real property.
Some of the common mistakes of Powers of Attorney are:
- Differences exist between the name of the adult in the Power of Attorney and the name of the registered owner. The Land Title Office requires the names to be exactly the same. Eg. if the name of a registered owner on title is “John Smith”, the name on the Power of Attorney must be “John Smith”, not “John Adam Smith”.
If a registered owner of a real property has plans to use a Power of Attorney to deal with the property, such as selling the property, it is prudent to review or conduct a title search of the specific property to check the name on title before preparing the Power of Attorney.
If a registered owner uses different versions of his or her name on different titles of different properties, more than one version of the Power of Attorney may have to be prepared.
The difference in the name of the adult in the Power of Attorney and the name on title is a common mistake. This creates a problem if the registered owner tries to sell the property by Power of Attorney. If the mistake is not identified ahead of the completion date of the sale, the transfer form changing title of the property will be rejected by the Land Title Office and the sale cannot be completed.
- A Power of Attorney contains alternate names for the attorney with reference to “also known as” or “aka”. Eg. “This Power of Attorney is given by John Smith also known as John Adam Smith”. Such wording is not acceptable for registration purposes. The use of alternate names will result in the Land Title Office’s decline to register the Power of Attorney.
- The attorney executes a transfer to himself or herself without the Power of Attorney expressly authorizing it. According to section 26 of the Property Law Act of British Columbia, an attorney cannot sale, transfer or convey land owned by the registered owner to the attorney himself or herself unless the Power of Attorney expressly authorizes the attorney to do so or the registered owner ratifies such sale, transfer or conveyance.
These mistakes will result in the Power of Attorney being rejected for registration at the Land Title Office, and thus useless for land purposes.
Other than the above common mistakes, there are also issues relating to the form of the Power of Attorney. If the Power of Attorney is a “springing” or “contingent” Power of Attorney that is only effective upon the happening of a specified event, any documents executed by way of the springing or contingent Power of Attorney filed at the Land Title Office must be accompanied by satisfactory evidence that the event stated in the Power of Attorney has occurred. Eg. if the event is the adult becoming mentally incompetent, as proven by two physicians licensed to practice medicine in the jurisdiction in which the adult is located, then two medical opinions confirming that the adult has become mentally incompetent must be provided to the Land Title Office to prove that the Power of Attorney is in effect.
It is therefore important for the Power of Attorney to be prepared correctly in the first place. While there are pre-printed Power of Attorney forms available from websites or legal stationers, these forms are not tailor made to be suitable for all situations. When it comes to real property, these forms are not “one size fits all”. A Power of Attorney may be a simple form but care must be taken in its preparation and questions asked in order to ensure that the Power of Attorney can be used for its intended purposes.
- Common Errors Leading to Defects http://ltsa.ca/practice-information/common-errors-leading-defects
For more inquiries on this topic, please contact one of the lawyers from our Real Estate Group.