Selling an apartment, house, land or business premises does not have to require the personal presence of the owner at every step. If the owner is abroad, ill, has reduced mobility or simply wants the procedure to be conducted by a trusted person, a special power of attorney for the sale of real estate may be the solution. It is a document by which the principal grants the agent clearly defined powers to take actions related to the sale on his behalf and for his account.
However, a power of attorney is not a formality that should be completed superficially. An unclearly written document can slow down the sale, prevent the buyer from registering or open the door to disputes. Below we bring you the most important information about the content, certification, scope of authority, duration and revocation of a special power of attorney under Croatian law.
What is a special power of attorney?
A power of attorney is an authorization to represent that one person, the principal, gives to another person, the agent, in a legal transaction. The authorized person can then take legal actions on behalf of and for the account of the owner, and the effects of these actions generally occur as if they were taken by the owner himself. The authorized person can be a natural or legal person, for example a family member, a lawyer or another professional.
A special power of attorney is limited to a specific job or a clearly defined type of job. In the case of a real estate sale, this means that the document should identify the owner, the authorized person and the real estate and state what the authorized person is allowed to do. A general power of attorney is not a good solution for selling real estate: it usually covers regular business activities, while the sale of real estate represents a significant disposal of property and requires special authorization.
When is it used?
The most common reason for issuing a power of attorney is the physical absence of the owner. For example, a person living in Germany, Austria or Australia can authorize someone in Croatia to prepare and conclude the sale of their apartment. A power of attorney is also useful when the owner, due to age, illness or impaired mobility, cannot visit institutions and come to sign documents.
In business, it is often used by companies whose directors wish to authorize a lawyer or other representative to carry out a specific transaction. The owner can also authorize a real estate agency to conduct negotiations and administration, but the authority to mediate should be carefully separated from the authority to sign contracts and dispose of money. RESIDENT Nekretnine can help organize the sales process, but the content of the power of attorney should always be adapted to the specific transaction and the interests of the owner.
What should a special power of attorney contain?
A good special power of attorney should be precise, understandable and consistent with land registry data. As a rule, it contains:
- name and surname or name of the principal, address, OIB and identification data;
- name and surname or name of the principal, address, OIB and identification data;
- an accurate description of the property: cadastral municipality, cadastral plot number, land registry entry number, address, area and co-ownership share if any;
- express authority to sell the property in question and to sign a preliminary contract or purchase and sale agreement and all other actions that will lead to the sale of the property in question;
- any authority to negotiate the price, hand over and take over documentation and represent the property before a notary, land registry court, cadastre, tax authorities and other institutions;
- rules for receiving the purchase price, if the money may be paid to the attorney-in-fact;
- date, place of issue, validity period and signature of the attorney-in-fact.
It is particularly important to determine the minimum acceptable price or the method of its approval. If there is no justified reason, it is safer for the buyer to pay the money directly to the owner's account, not the attorney-in-fact. It should also be decided whether the attorney-in-fact may sign a tabular statement, which allows the buyer to be registered, and whether he may take over the keys and hand over possession.
Certification and document form
A real estate purchase and sale agreement must be concluded in writing, and the power of attorney for its conclusion must also be in writing. In practice, the signature of the principal is certified by a notary public. Such certification confirms the authenticity of the signature, but does not mean that the notary has necessarily checked whether the content of the power of attorney is best for the owner. Therefore, it is useful to review the draft with a lawyer or other qualified legal professional in advance.
The Land Registry Act is particularly important for the registration of ownership rights. When the purchase and sale agreement is signed by an agent, a power of attorney with the certified signature of the agent is attached to the proposal for registration. The law allows for a special power of attorney issued specifically for that transaction, and for a general power of attorney or a power of attorney for a specific type of transaction, an additional time rule is provided: at the time of drawing up the document on the basis of which registration is requested, the general power of attorney must not be older than one year.
If the owner signs abroad, the document can be certified at a Croatian diplomatic or consular mission (embassy or consulate) or by a foreign notary public. In the latter case, an apostille, or other legalization, and a certified translation by a court interpreter may be required. The requirements depend on the country in which the power of attorney was issued, so they should be checked before signing.
Scope of authority and risks
The authorized person may only do what he is expressly authorized to do. If the power of attorney only allows for negotiations and collecting bids, he may not sign the final contract. If he exceeds his authority, the owner is not bound by such work unless he subsequently approves it. In the meantime, claims for damages may arise, especially if the other party to the contract was conscientious and did not know that the authority was insufficient.
Therefore, broad and vague formulations such as "take all necessary actions" without additional clarification should be avoided in the power of attorney. It is better to list every important action: advertising and negotiation, signing of the preliminary contract, signing of the contract, certification of signature, filing of tax and land registry proposals, issuing of a tabular statement and receipt of money. If there is a possibility that the conditions of sale will change, the obligation of the owner's prior written consent can be prescribed.
Duration, revocation and termination
A power of attorney may be valid until a specific date, for a specific period or until the performance of the work for which it was issued. If the term is not specified, it generally lasts until the grantor revokes it, but it is not good to rely solely on an unlimited duration. A short and reasonable term reduces the risk of abuse and encourages timely completion of the sale.
The grantor may revoke or reduce the power of attorney at any time. It is best to immediately deliver the revocation to the grantee, the notary public, the agency and the potential buyer, preferably in a manner that provides proof of receipt. Such a change may not have any effect in relation to a third party who did not know or should have known about the revocation or reduction. Therefore, the revocation should be communicated without delay.
A power of attorney may also terminate upon the death of the principal or the principal, the termination of the legal entity, the expiration of the term, or the performance of the work for which it was issued, with legal exceptions. If the ownership data, cadastral designation, authorized person, or conditions of sale change in the meantime, it is safer to draw up a new power of attorney.
Practical checklist
Before issuing, check whether the description of the property matches the current land registry extract and whether all co-owners are included. Agree in advance on the price, sale date, method of payment, and transfer of possession. Determine whether the principal may transfer the authority to another person; if you do not want this, explicitly state that sub-power of attorney is not permitted. Finally, check whether the notary, bank, and land registry department will accept the specific text.
A special power of attorney can make selling a property faster and easier, especially when the owner is not in Croatia. If you need advice on selling a property and you do not live in Croatia, please read the blog on this topic or contact us for a FREE CONSULTATION at 091 790 0020, we will be happy to help.
Note: This text is informative and does not replace individual legal advice. Regulations and practice may change, and in the case of more complex ownership relationships, mortgages, co-ownership or sales from abroad, it is recommended to consult a lawyer and a notary public.