The seller is signing under a power of attorney. What changes?
A power of attorney is not a general permission slip for a family member. It is a specific grant with its own conditions, and sometimes it has not taken effect yet.
The short answer
The authority comes from the document rather than from the relationship, so what the attorney may do depends on what it says. Where two attorneys are named they must act jointly unless the document provides otherwise. Robin Patel, a REALTOR® in the Greater Toronto Area, sends it to the lawyer before the offer.
Written forBuyers in the GTA whose seller is signing under a power of attorney, and families selling a parent's house where the parent can no longer handle the transaction themselves.
The short version
- A person eighteen or older is presumed capable of entering into a contract, and a person may rely on that presumption unless they have reasonable grounds to believe otherwise.
- A power of attorney for property is a continuing one where it says so, or where it expresses the intention that the authority may be exercised during the grantor incapacity to manage property.
- A continuing power of attorney may authorize the attorney to do anything in respect of property that the grantor could do if capable, except make a will.
- Where two or more attorneys are named, they must act jointly unless the document provides otherwise, so one signature may not be enough.
- The document may provide that it comes into effect on a specified date or when a specified contingency happens, so it may not be operative yet.
Start from the presumption, not the assumption
The Substitute Decisions Act begins from a position worth stating plainly, because families often assume the opposite. A person who is eighteen years of age or more is presumed to be capable of entering into a contract, and a person is entitled to rely upon that presumption about someone else unless they have reasonable grounds to believe that the other person is incapable.
So age alone changes nothing, and nor does a diagnosis by itself. An owner who can deal with their own property signs for themselves, and a power of attorney does not need to be used merely because one exists somewhere in a drawer.
So age alone changes nothing, and nor does a diagnosis by itself.
What the document actually grants
A power of attorney for property is a continuing power of attorney where it states that it is one, or where it expresses the intention that the authority given may be exercised during the grantor's incapacity to manage property. That is what makes it survive the thing people are usually worried about.
As to scope, the Act says a continuing power of attorney may authorize the attorney to do on the grantor's behalf anything in respect of property that the grantor could do if capable, except make a will. The word to notice is may. It is a ceiling rather than a default, and the same section makes the power subject to the conditions and restrictions contained in the document itself.
| Question | What the Act provides |
|---|---|
| What makes it continuing | It says so, or expresses the intention that the authority may be exercised during the grantor incapacity to manage property |
| How much can it grant | Anything in respect of property the grantor could do if capable, except make a will |
| Is that automatic | No. It is subject to the conditions and restrictions contained in the document |
| Two or more attorneys | They shall act jointly, unless the power of attorney provides otherwise |
| Is it in force now | It may provide that it comes into effect on a specified date or when a specified contingency happens |
| Must it look a certain way | It need not be in any particular form |
The two provisions that stop closings
The first is joint action. Where a continuing power of attorney names two or more persons as attorneys, the Act provides that they shall act jointly unless the power of attorney provides otherwise. Two siblings named together is extremely common, and a document signed by only one of them where joint action is required is a problem discovered late.
The second is timing. A continuing power of attorney may provide that it comes into effect on a specified date or when a specified contingency happens. A document drafted years ago to spring into effect on a stated event is not operative merely because the event feels close, and whether that contingency has been met is a question about evidence rather than about intentions.
When there is no document, and what to ask
Where no continuing power of attorney exists and the owner cannot manage their property, authority comes from a guardian of property instead. The Act gives a guardian of property power to do on the incapable person's behalf anything in respect of property that the person could do if capable, except make a will, and makes those powers subject to the Act and to any conditions imposed by the court.
Either way, the practical step is the same and it is early. The document or the appointment is what the lawyer needs to see, and it needs to be seen before an offer is signed rather than during the closing week, because every question raised here is answered by reading it.
Written by
Robin PatelSalesperson · The Agency Toronto
Updated
Published
Read in your language
A machine translation, not Robin’s words. For anything that decides money, ask him in Gujarati or Hindi directly.
