In real estate, you will hear the term power of attorney, or attorney-in-fact. This will also come up on your exam, so let’s understand what it means.
People sometimes get confused by the word “attorney,” as they automatically think of a lawyer. According to the pure definition of the word, an attorney is a person appointed to act for another in business or legal matters. That does not always mean a lawyer.
When you hear the term “power of attorney,” you do not get an image in your head of a lawyer having superpowers. A power of attorney is a legal document that authorizes someone to act for you. You are naming someone who will be acting as the attorney-in-fact. Simply said, legally speaking that person is you for that one act!
You can authorize an attorney-in-fact for such things as signing checks and tax returns, entering into contracts, buying or selling real estate, depositing or withdrawing funds, running a business, or anything else you do for yourself.
Since the power-of-attorney document is tailored for its specific purpose, the attorney-in-fact cannot act outside the scope designated in the document.
For example, Bob may own a home in New York that he wants to sell. Instead of traveling to New York to complete all the necessary paperwork, Bob can authorize his buddy Bill who lives in that state to do this for him. Bob granted Bill the power of attorney, and Bill is acting as the attorney-in-fact. Bill is acting as Bob.
A regular power of attorney ends when its purpose is fulfilled or at your incapacity or death.