Various types of powers of attorney (PoA) are recognised in the UAE and they may be general, absolute, special, restricted or conditional. The PoA should be notarised by a UAE public notary so that the person using or accepting it knows the right has been correctly granted.
If issued outside the UAE, it must be notarized in the country of issue and at the UAE embassy in that country and subsequently legalized at the Ministry of Foreign Affairs here. It should then be translated by a certified translator into Arabic (if not already translated in the notarized copy).
The common hurdles with a PoA
For a POA to be used in real estate transactions, the respective rights to deal in real estate must be stated clearly. Common hurdles include lack of reference to the type of real estate transactions and lack of reference to the appropriate authorities. In addition, if the POA is old the authorities may request that it is re-validated.
A common concern is if an attorney exercises his rights under a PoA, and the principal is dissatisfied with the manner. In such a scenario, it may be difficult for the principal to bring a legal action or claim against the attorney, since it is arguable the attorney’s actions were performed under the mandate of the PoA which was granted by the principal.
This may arise if a property is sold or rented at a value the principal is not happy with.
How is a PoA terminated?
- PoA expires and is deemed ineffective in the following circumstances:
- Completion of the assigned work;
- Expiry of the fixed period of the PoA as stated therein;
- Death or legal disqualification of the principal;
- Death of the attorney; and/or
- Revocation of the PoA by the principal.
What are the obligations of an attorney?
An attorney is obligated to exercise his rights in a prudent manner within the limits of the PoA in a manner beneficial to the principal. If an attorney is unable to carry out the activities, he may delegate his powers under a PoA to a third-party provided he is validly authorised to do so. In doing so, the attorney may be responsible towards the principal for the mistakes of the delegated person.
An attorney is free to resign from his obligations under a PoA by providing notice to the principal. However, any work undertaken by the attorney must be continued in a manner not to cause risk to the principal.
An attorney may be liable for any damage sustained by a principal arising out of his resignation at an inappropriate time or without justification, if the attorney is being paid for his services.
Issues to think about when granting a PoA for real estate transactions.
- Consider whether you have the capacity to grant a PoA with respect to the particular property and whether such property can be lawfully dealt in.
- Consider to whom you wish to grant a PoA, what powers you will confer to them and what type of PoA you will grant. Items to consider include circumstances when there is more than one attorney.
- Understand if the attorney wishes to accept this responsibility and will fulfill the obligations until the end of the transaction.
- Consider whether the attorney will be involved in financial aspects pertaining to your properties.
- Fully understand and assess the worst-case scenarios prior to issuing the POA, and consider the procedure and costs relating to issuance, legalization and revocation.