Legal Updates

A power of attorney for a real estate transaction need be notarized but even without notarization obligated the grantor

June 12, 2022

The nephew of a property owner negotiated with the bank on his behalf for the transfer of monies received from the sale of the property after the execution of a mortgage. After the transaction was completed and the amounts transferred to third parties, the property owner demanded compensation contending that he never approved the sale of the property or authorized his nephew to handle the matter with the bank.

The Court held that a valid power of attorney was given to the nephew to deal with the bank regarding the sale of the property and therefore the owner of the property cannot void it after the fact. A power of attorney to execute real estate transactions that require recording with the real estate registry must be notarized. However, when the grantor of the power of attorney contends after the fact against the issuance of the power of attorney due to a technical failure, as if it had never been valid, even though he himself granted it, it is a bad faith contention that violates the principle of agency and is an attempt to retroactively cancel an action made in good faith and out of a belief that the agent is acting in accordance with the will of the grantor. Here, the power of attorney was given by the property owner and his contentions against it were raised only after the transaction was completed. At such a late date the property owner is prevented from contending against his nephew that the power of attorney is invalid due to the lack of notarization because such a contention is made in a bad faith and is causing harm to the nephew who fulfilled his obligations under the power of attorney and did not receive any undue personal benefit or caused damage to the property owner in the course of his agency.