Assuming a Mortgage With Power of Attorney

By Mark Vansetti

While state laws regarding powers of attorney vary, a power of attorney can allow one person to conduct financial transactions on another person's behalf. This may include the power to buy and sell real estate. The power of attorney may also include the power to assume a mortgage held by another person.

While state laws regarding powers of attorney vary, a power of attorney can allow one person to conduct financial transactions on another person's behalf. This may include the power to buy and sell real estate. The power of attorney may also include the power to assume a mortgage held by another person.

Assuming a Mortgage

The act of assuming a mortgage involves one person taking over another person's mortgage. Typically, the person who assumes the mortgage will also take ownership of the property. The mortgage terms will include a clause indicating that the mortgage is either assumable or not assumable. If the mortgage is assumable, the person taking over the mortgage will be subjected to the same terms as the original mortgage holder. In other words, the terms of the mortgage and interest rate typically remain the same.

File a DBA for your business online. Get Started Now

Power of Attorney

The principal is the person granting someone else the power to conduct real estate transactions on her behalf using a power of attorney. The language in the power of attorney will include a specific clause or wording that allows the agent to handle real estate transactions. Some powers of attorney are specifically intended to grant an agent the power to transact real estate.

Who Is Liable

The person who assumes the mortgage is liable for the debt. Therefore, if the agent assumes a mortgage on the principal's behalf, the principal will be liable for the debt, not the agent. The agent may also allow a third party to assume a mortgage originally held by the principal. In that case, the third party would be liable for the debt, not the principal or agent.

Fiduciary Responsibility

The agent is charged with a fiduciary responsibility to act in good faith on behalf of the principal. In other words, the agent has a duty to make decisions under the power of attorney that are in the principal's best interest. Therefore, the agent may assume a mortgage on behalf of the principal only when it benefits the principal in some way.

File a DBA for your business online. Get Started Now
Can You Change a Deed Anytime You Want to if You Have Power of Attorney?

References

Related articles

Can a Person with My Power of Attorney Get Sued if a Credit Card Company Sues Me?

With a power of attorney, the document's creator, called a principal, gives authority to someone else, called his agent, to act on his behalf. The agent may have broad permission to access the principal's finances and even make charges on his credit card. However, agents are not typically personally liable for a principal's credit card debt.

Does Having a Power of Attorney Require Reporting How Money Is Spent

A power of attorney is a written authorization by which a person, or principal, authorizes another person, the agent, to act on her behalf. A financial power of attorney allows the agent to manage the principal's financial affairs, such as bank accounts, investments, bill payment and business affairs, as designated in the power of attorney. The power of attorney creates a strict fiduciary duty to manage the principal's funds appropriately, including engaging in careful bookkeeping to document all expenditures.

Can a Power of Attorney Change Beneficiaries on Bank Accounts?

An individual who has been given authority via a power of attorney, also known as an "agent," may sometimes change beneficiaries on bank accounts. Although state law varies, this type of authority may only be granted in specific circumstances. When an agent wields authority she does not actually have --such as changing beneficiaries -- it may be considered an abuse of her power.

Related articles

Differences Between a Power of Attorney & a Letter of Authorization

Actors and baseball players aren't the only people who need agents. Life is complicated so we often must appoint ...

Can a Power of Attorney Be Revoked by a Mentally Incompetent Principal?

Power of attorney is one of several legal mechanisms designed to protect a person's legal interests. A durable power of ...

Can You Sell a Home With a Power of Attorney?

Depending on state laws, powers of attorney can give an agent broad powers over someone’s finances and property. ...

Can a Power of Attorney Get a Home Loan?

If you aren’t able to personally accomplish a task, you may grant someone else – called your agent – ...

Browse by category