What is a “Power of Attorney”?
A “Power of Attorney” (“PA”) is a document by which a person (‘the Donor”) who is not physically able to do so, appoints another person (“the Donee”) to act for him/her in legal transactions, such as buying, renting, managing or selling of a Housing And Development Board (“HDB”) flat or private property.
Let’s say you are required to work overseas for a few years and while away, you wish to rent out your Singapore home. Instead of making frequent international calls to your agent and couriering documents to and fro, you can get a lawyer to draw up a PA before you leave Singapore for the overseas job. The PA will enable your trusted friend or a relative in Singapore to do everything for you, such as appointing an agent to secure a tenant, signing the tenancy agreement, collecting rent, negotiating terms of renewal and doing everything that you could have done yourself had you been in Singapore and physically able to do so.
Another example of the use of a PA: your bedridden relative has relocated to a nursing home and needs your help to sell his house and operate his bank account for him. He can execute a PA to authorise you to act for him in these matters.
Who can execute a PA?
Anyone with legal capacity (above 21 years of age and is not an undischarged bankrupt) and also has mental capacity can execute a valid and enforceable PA.
Under Section 4 of the Mental Capacity Act, a person is considered as lacking mental capacity regarding a matter if he/she cannot decide for himself/herself in relation to the matter due to an impairment or disturbance in the functioning of the mind or brain – regardless of whether the impairment or disturbance is permanent or temporary.
There are four key tests. A person lacks mental capacity if :
- he/she is unable to understand any information necessary and relevant regarding the foreseeable consequences of his/her decision;
- he/she cannot retain that information;
- he/she is unable to use, or weigh that information as part of the process of coming to a decision; and
- he/she cannot communicate his/her decision – whether by speech, sign language, writing, or any other means.
What else is needed for a PA to be acceptable for use?
(a) Clear and Precise Wording
The PA must be drafted in clear and precise language, leaving no room for doubt so that third parties may not reject the PA but may rely on it without having to make further enquiries. The powers to be granted to the Donee must also be specifically stated. For example, if you want to empower your Donee to apply to buy an HDB flat on your behalf, you must also state clearly that he also has authority to secure a housing loan and, if applicable, to apply for the withdrawal of your Central Provident Fund (“CPF”) savings to finance the purchase and/or to pay the monthly instalments of the loan. If you do not need a loan and are also not using any CPF money, you will, of course, not need to provide these ancillary powers in the PA. However, if you are like most buyers, you must include these specific powers in the PA or the Donee will not be able to assist you and the purchase may be delayed while a fresh PA is done or documents couriered to you overseas for signature.
HDB has its own prescribed format for a PA which includes many specific provisions on signing of documents, accessing CPF accounts, seeking loans, opening of utilities accounts and collecting keys. Lawyers must use the prescribed specimen PA but may adapt it to suit the specific needs of a client.
(b) Certificate of Attestation of Due Execution
The Donor of a PA must sign it in the presence of a lawyer or, if signed overseas, in the presence of a Notary Public practising in the foreign jurisdiction or a Singapore Consular Officer in the country overseas. The lawyer, Notary Public or Consular Officer is the witness who must verify that the Donor is sui juris (has legal capacity) and understands what he/she is signing (has mental capacity), and thereafter, attest to these by signing a certificate affirming due and proper execution of the PA.
(c) Registration of PA
The PA must be deposited for registration at the High Court of Singapore. Any party who is asked to accept the PA for use can do a search at the High Court to verify that the PA is valid and subsisting, and has not been revoked.
Why are there so many requirements?
Supposing you are the buyer of a property and the seller, who is overseas, is executing the sale contract and transfer of legal title to you by his Attorney (the Donee) pursuant to a PA. Surely you will want to be certain that the Donor had legal and mental capacity at the time of signing the PA, that the Attorney has the authority to pass title to the property to you and the PA is valid and subsisting from the start to the conclusion of the transaction? These requirements are for the protection of those who need to rely on a PA, not just the Donor but also outsiders or third parties such as the buyer, CPF Board and the bank providing the funding for the transaction.
When does the PA come into effect and when does it end?
The PA takes effect on the date stipulated in the document, or when the situation contemplated in the PA has arisen and the Donee or Attorney is required to perform an act or deed specified in the PA. The PA may be worded to expire or end on a stipulated date. This is the case of a PA for dealings in an HDB flat. HDB does not permit a PA to last beyond 6 years from its commencement dare. A fresh one has to be done if the Donor still needs the Donee’s assistance.
The PA will also end when a condition is fulfilled. For example, you have returned to Singapore and can act for yourself. You can also decide to terminate or revoke a PA, such as when you wish to replace one Donee by another. You will then revoke the PA and re-execute a fresh one. It is important, in such an instance, to notify (by registration) the High Court of Singapore of the Deed of Revocation as well as registering the fresh PA.
A PA is terminated by the death or mental incapacity or bankruptcy of the Donor. Since the Donee derives his/her power from the Donor, the power must necessarily end with the death or cessation of mental or legal capacity of the Donor.
What is the difference between a Power of Attorney and a Lasting Power of Attorney?
As stated above, a PA ceases when a Donor lacks mental capacity. In contrast, a Lasting Power of Attorney (“LPA”) is a document that is executed by a Donor when he/she has mental capacity and comes into effect only when he/she loses mental capacity, whether temporary or permanent. Like a PA, an LPA must also have a witness who can be a lawyer or a doctor trained to attest execution of legal documents or a psychiatrist. An LPA must also be registered, not with the High Court of Singapore, but with the Office of the Public Guardian.
Need legal advice on properties matters?
If you need legal advice on property related matters, you can get a Quick Consult with Hi Keng Yu – Ting or other lawyers. With Quick Consult, you can check out in minutes and for a transparent, flat fee, the lawyers will call you back on the phone within 1-2 days to answer your questions and give you legal advice.
This article is written by Hi Keng Yu – Ting from Yu & Co and edited by Tang Chee Seng of Asia Law Network.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.
Continue reading: