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A power of attorney (POA) is a legal document in which one person, the grantor, authorizes another person, the attorney, to act on their behalf — including, in some circumstances, signing mortgage or real estate documents — within the scope and conditions the document sets out.
Not every power of attorney is the same: a general power of attorney typically ends if the grantor becomes mentally incapable, while a continuing or enduring power of attorney for property is specifically drafted to remain valid through incapacity. Provincial legislation, such as Ontario's Substitute Decisions Act, 1992, sets the requirements for a valid power of attorney for property, and requirements vary by province.
Because using a POA to sign a mortgage is a recognized elder-financial-abuse and fraud risk, lenders and lawyers scrutinize these files more closely than a direct signature — commonly requiring a lawyer's opinion confirming the POA is genuine and still in effect, and confirmation the grantor is alive and, where relevant, had capacity when the document was signed. Brokers should flag a POA situation with the lender and lawyer as early as possible, since it can add conditions or delay to closing.
Two broad types: a general power of attorney typically ends if the grantor becomes mentally incapable, while a continuing or enduring power of attorney for property is specifically drafted to remain valid through incapacity.
Provincial legislation governs the form: requirements for a valid power of attorney for property are set by provincial statute, such as Ontario's Substitute Decisions Act, 1992, and requirements vary by province.
Lenders scrutinize POA-signed mortgages: because of the added fraud and elder-abuse risk, lenders commonly require a lawyer's opinion confirming the POA's validity before accepting a document signed on someone else's behalf.
A known fraud vector: link title fraud — a forged or abused power of attorney is a recognized method fraudsters use to transfer or encumber a property without the true owner's knowledge.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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