Power of Attorney’s Objective:
The POA should explicitly state that its main objective is to give the friend—also referred to as the agent—the authority to oversee particular areas of the property. In this instance, the duties will include managing maintenance, collecting rent, and making sure the property is kept up. By establishing this goal, the POA document stays on topic and prevents misconceptions.
Establish the Authority’s Scope
The principal in this POA wants the agent to take care of solely rent and upkeep. To keep the agent from going above their assigned power, it is crucial to limit their duties. The precise acts the agent is capable of performing should be described in this section:
Rent Collection: Give the agent authority to collect rent from renters on the principal’s behalf.
Maintenance Supervision: The agent can take care of little fixes, schedule required upkeep, and guarantee the property stays in good shape.
Describe the Rent Income Distribution in Detail
It’s crucial to make this arrangement explicit because the agreement calls for the agent and the principal to split the rental income equally. Add the agreed-upon percentage (50 percent each) and the monthly distribution of this money.
Summary money Procedure: Indicate the method and timing of the money transfer. A monthly transfer schedule or any other circumstances that can impact the distribution can be included.
Specify the Conditions for Reporting
It is advantageous for the principal to request regular reports even when the agent has autonomy in carrying out their given activities. This keeps the principal updated on rental income and property conditions.
Report types include monthly income statements, maintenance reports, and repair receipts.
Determine the frequency at which these updates should be sent—monthly, quarterly, etc.
Specify the Power of Attorney’s Duration
Choose if this POA will be limited (ending if the principal becomes disabled) or persistent (continuing even if the principle becomes incapacitated). Additionally, specify if it is indefinite until revoked or for a fixed term.
Option 1: Time-Limited POA: Indicate the beginning and ending dates.
Specify that the POA is indefinite unless the principal revokes it.
Add Restrictions and Limitations
The principal may want to restrict the agent’s authority in certain ways, like:
Spending Cap on Maintenance: Give the agent discretion over maintenance choices while keeping costs within a certain range. For example, state that the principle must approve any repairs costing more than $500.
Lack of Power to Sell: Make it clear that the agent is unable to lease, sell, or otherwise change ownership of the property.
Include an indemnity clause.
A provision that makes the agent responsible for any careless or deliberate wrongdoing may be added by the principal. This provision shields the principal from any losses brought on by the agent’s inappropriate behavior.
Deal with the Termination Conditions
It’s crucial to specify the circumstances under which the POA may end:
Principal Revocation: The POA may be revoked at any moment by the principal.
Agent Misconduct: The POA may be promptly canceled if the agent breaches any of the terms.
Property Sale Completion: The POA immediately terminates once the property is sold.
Describe the Agent’s Salary and Payment
Indicate this agreement as remuneration because the agent will get a portion of the rental money. Additionally, think about permitting compensation for essential property management costs.
Get ready for notarization and legal formalities.
POAs involving real estate must be notarized in several jurisdictions. By taking this step, the document becomes legally binding and avoids authenticity problems.
Notary Public: A notary public should be present when the principle and agent sign the POA.
Witnesses: Verify local regulations to see if two witnesses are required in certain areas.
Make copies and keep the original document in a secure location.
Distribute copies of the POA to the principal, the agent, and any financial institutions that may be required after it has been filled up and signed. The original document should be kept in a safe or with a legal representation.