Irrevocable power of attorney - real-estate lawyer in Jerusalem and Tel Aviv

What is an irrevocable power of attorney and how is it obtained? As opposed to a regular power of attorney, which allows the agent to act on behalf of the principal, an irrevocable POA is unlimited in time and cannot be canceled by the principal. In other words, an agent who receives an irrevocable POA is authorized to act as specified in the POA letter even against the wishes of the principal. This an accepted way to enforce real-estate contractual obligations.

Our law firm, which has branches in Jerusalem and Tel Aviv, offers a wide variety of notary services: legal translation of documents, authentication of signatures, regular powers of attorney (POAs), enduring POAs, irrevocable POAs, and more. In this article, lawyer Michael Decker explains about the differences between a regular and irrevocable POA and when each is needed.

WHAT IS THE DIFFERENCE BETWEEN A REGULAR AND IRREVOCABLE POA?

A POA allows the agent to perform legal actions on behalf of the principal in respect to a third party. The law allowing this is the Agency Law, 5725–1965, which states that “a person’s agent has legal status equivalent to his own” and, therefore, every act of the agent binds the principal or grants them privileges as if the principal was the one to perform the act.

A POA may be granted via a lawyer for almost any legal act, and, sometimes, even via someone who is not a lawyer, as stipulated in the law. In certain cases, when a legal action must be performed in person, it is not possible to grant a POA. This is the case when divorcing a spouse, converting to another religion, writing a will, or making decisions under the Dying Patient Law (a.k.a. the Terminally Ill Patient Law).

WHAT IS AN IRREVOCABLE POA?

An irrevocable POA is granted for a third party and is usually meant to complete real-estate and other sale deals. This type of POA is intended to protect the rights of a third party who, in most cases, has already paid the value of these rights. For example, an irrevocable POA may be granted to the lawyer of an apartment buyer for the purpose of completing the transaction in accordance with the sale contract.

A regular POA expires in any of the following cases:

The POA was canceled by the principal.
The POA was defined to be limited in time.
The principal or agent has passed away.
The principal is no longer lucid and, therefore, no longer has legal capacity.
More than 10 years have passed since the POA was signed.

However, an irrevocable POA, as its name implies, is unlimited in time and cannot be canceled except under certain conditions that must be mentioned in an agreement that both parties signed, or due to a court order. The parties involved are the ones to decide what acts the agent will be authorized to perform and when the POA will expire, and the above cases have no effect on a signed irrevocable POA.

A POA is a contract between the principal and the agent, and the latter must act in accordance with the wishes of the principal. The agent is bound by loyalty to the principal and, therefore, any deviation from the principal’s directions, or any action that goes against the wishes of the principal, may be considered a breach of the contract and may serve as grounds for prosecution.

WHAT IS THE PURPOSE OF HAVING AN IRREVOCABLE POA?

An irrevocable POA is essential for protecting the rights of a person purchasing real estate up until the real estate is transferred to their name in the real-estate registry. In addition, an irrevocable POA allows the transfer of the property from the previous owner to the purchaser. Therefore, even if the seller has died or has become mentally incapable before transferring the ownership, the POA ensures that the signed transaction will be completed.

The common practice when a real-estate transaction is completed is to sign a POA with the purchaser’s lawyer, which allows the transference of the property rights to the buyer after the transaction is completed and the price is paid. Not signing a POA may lead to difficulties in registering the buyer’s ownership of the property if the seller refuses to sign the final transaction documents.

If you need the help of a lawyer to complete a real-estate transaction, formulate the contract, and sign a POA—contact us and we will be happy to be at your service.