Is a power of attorney an abdication, or temporary delegation of your authority to act?

“I recently had to sign a power of attorney authorising my attorney to act on my behalf in my property transfer. It just got me wondering about what exactly a power of attorney means and for how long it remains valid. Can you enlighten me?”

A power of attorney (POA) is a document wherein one person (the Principal) provides authorisation to another (the Agent) to act on his behalf. Usually, this power of attorney is provided with a specific purpose in mind. As you mentioned, a POA is quite common when it comes to property transactions. Here a person, usually an attorney, is provided with the authority to sign and submit the necessary documents on behalf of the Principal when preparing and submitting the relevant documents to the Deeds Office. In this way, the process of registration can be speeded up as the attorney (as Agent) can sign on the Principal’s behalf and so avoid having to get the signature of the Principal each time something needs to be signed.

This is often the general use of a POA – to speed up certain administrative processes by allowing another party to take care of and sign documents on your behalf. Another type of POA can be where a POA is given to an Agent as a form of security. Typically, one may encounter such a POA where a financial institution demands a POA as security for debt. For example, the Principal must provide the bank (Agent) a POA allowing the bank to sell moveable or immovable property on behalf of the Principal to cover the Principal’s debt obligations, should the Principal for example default on payment. By giving such a POA, the bank in effect obtains the Principal’s consent in advance to sell the property and can continue with such actions should the Principal default. Hence the use in this situation as security. 

However, to answer your question of how long a POA remains valid, we should look at a very recent judgment by our Supreme Court of Appeal, where the court had to deal with the question of whether a POA given as security could be revoked and if so when.

In assessing the position, the court reiterated the general position that a Principal can at any time terminate (revoke) a POA, unless:

1. It was granted for the purpose of protecting or securing some interest of the Agent
2. It forms one of the terms of a contract between the parties
3. It was given to secure performance of a promise made by the Principal to the Agent

Accordingly, our courts found that despite the general position that you can terminate a POA at any time, a Principal may not terminate or revoke a POA while the debt sought to be secured remains outstanding. 

January 6, 2021

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