Power of Attorney Between Joint Owners

If you hold a deed jointly, you might wonder what would happen if one joint owner becomes incapacitated. Can just one of you carry out refinancing or a sale on behalf of both of you?

With a power of attorney (POA), one co-owner—called an agent—can sign legal agreements for the co-owner—called the principal—who loses the capacity to sign.

Each of you can have your own POA. Each can step in as the agent for the other if need be.

Do not assume your state law automatically gives a spouse the legal ability to act as agent for the other. Both co-owners should create POA documents that name the other as holding POA.

Using the POA for a Joint Owner in Your Home Sale

Here are some frequently asked questions about a POA among joint owners.

Q. Neither one of us is ill at this time. When is the best time to create the POA?

Now is the time! You need to create the POA while you have the legal capacity to sign contracts. This way, you prepare your joint owner to sell your home, or otherwise transfer ownership in case you lose that ability.

Q. Which type of POA do we choose?

The durable power of attorney is effective once created, executed, and recorded. It stays in force if you become unable to sign contractual agreements. So it’s the document of choice when assigning an agent the ability to sign for real estate transactions. This instrument names your agent and sets forth the agent’s authority to sell, buy, finance, or manage real estate. Your agent can then list your home, negotiate, and sign legally binding documents for you, the principal.

Compare Ohio’s limited power of attorney for real estate to the state’s general durable power of attorney.

Q. In which circumstances is it best to use a springing power of attorney?

A. Alternatively, a POA can be created to take effect when the principal becomes disabled. Use a springing power of attorney if you only want your agent to act on your behalf when a specific thing occurs (a medical statement of incapacitation, for example). This document must state the situation that gives your agent POA authority. When your agent submits a springing POA, the title company typically asks for background information, and a doctor’s certification that you are incapacitated. Until then, your POA agent may not legally use the POA on your behalf.

Q. Is a POA the same across the country?

A. You’ll need to follow state law and your county’s rules on the power of attorney in real estate transactions. (Some require the POA to state that the agent has accepted the power of attorney on behalf of a principal. Some don’t let the notary count as a witness when the POA is signed. And so forth.)

Q. How do I assign someone else specific authority under a POA?

A. You’ll write your agent’s powers (and any limits on those powers) into your POA. State that your agent may perform any legal business involving the real estate. Initial the form beside any specific task you are assigning to your agent. As the principal of the POA, you should sign the document, together with your authorized agent and witnesses, following state requirements. It’s a good idea to also name a successor agent — someone who could step up if for any reason your spouse or other preferred agent can’t serve.

Q. Does the POA continue if the principal dies?

A. No. When you pass away, your POA agent’s authority is no longer in effect. The probate court approves the executor you named in your last will to manage your estate from there.

Q. Can I revoke a recorded POA?

A. While you still have the capacity to understand and sign contracts, you can record a revocation form. Under your home state’s law, you may be required to inform your POA agent in writing.

Q. How do I use the POA for a deed transfer?

A. You’ll sign the purchase agreement and give the notarized POA to the settlement company to record. If you’re using a springing POA, enclose medical evidence to show why the POA has become effective.

The POA agent signs the deed, “acting as agent for [incapacitated person’s name] under power of attorney” or similar language as written on the form. The deed transfers the title. The settlement agent can now file the deed in the public records together with the POA.

Q. Is selling with a POA something real estate professionals know how to do?

A. Yes, it’s a normal situation. When you contact real estate professionals, let them know there’s a power of attorney. The title company involved in your transaction will check that the POA is a legitimate assignment of authority to sell the home.

Q. Is there anything else we need to know?

A. For more, see our tips on avoiding pitfalls when transferring real estate through power of attorney. 

Review Your Estate Plan With Your Attorney Periodically

Professional legal advice can spare you from common blunders (such as authorizing your agent to transfer a deed to your kids without considering that an inheritance could reduce the family’s tax burden and keep appropriate control for you).

State laws can change, and so will your personal circumstances. So, review your plans with a professional periodically.