Brian Cannan: We're here today with Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Hello Greg, How are you?
Greg Jemmeson: Hi Brian.
Brian: So we're talking about contracts and the power for people to sign those contracts and I suppose we should start with power of attorney. How do they work?
Greg: Okay Brian, power of attorney is a very powerful instrument. It's usually given to a party on behalf of somebody so that they can manage their affairs and in certain instances if it's a registered power of attorney, a person can sign a transfer document to transfer the title of land. Now there is a common misconception within the industry that for somebody to sign a contract for sale of land on behalf of a party, they need to have a power of attorney. In fact that is not the case, in particular we're talking about auctions, so for example, a party to attend an auction and bind a third party to a contract of sale of land that party attending the auction would need a letter of authority saying that they are authorized to bid on behalf of that third party and they are also authorized to sign the contract on behalf of that party.
Brian: So why do some solicitors say you can't do that?
Greg: Well it's quite clear within the Property, Stock and Business Agents Act that the only authority needs to be a written authority not a power of attorney.
Brian: So you're saying to me a written authority to sign a contract, but you need a registered power of attorney to be able to sign a transfer document.
Greg: That's right, so that third party who has been placed on the contract is the purchaser. The person who was attended and bid at the auction and signed the contract on their behalf would not be able to sign the final transfer document allowing that person to be placed on the title of that property.
Brian: So if I was the agent, I want to keep a copy of that authority obviously my documentation.
Greg: It's part of your bidders register, yes.
Brian: Okay, so then let's talk about buyers agents and they're becoming quite prevalent at the moment. We have a lot of buyers agents coming to auctions bidding and then saying that the auctioneer should be signing the contract on behalf of your client.
Greg: Okay, the simple authority that a buyer's agent would have, would be their agency agreement which sets out all of their authority and that agency agreement should set out that they are entitled to bid on behalf of that party.
Brian: There's a number of buyer agency agreements that don't have that.
Greg: Okay well then they then need a separate written authority from their principal, being the purchaser in this case, setting out again the authority for them to bid on their behalf. Best practice would be for them to have the authority to sign, but in this particular instance if they have authority to bid on behalf of that prospective purchaser and then the property is knocked down to that buyer's agent acting as a buyer's agent then you as the auctioneer would be duly authorized as an auctioneer to sign and bind that purchaser to that contact.
Brian: Okay so what you're saying is if they have the authority to bid and sign, they can do that?
Brian: If they've only got authority to bid then the auctioneer would be the one to sign the contract.
Greg: That is correct.
Brian: Well thank you for clearing that up for us Greg. I think that's going to help a lot of people.
Greg: No problems, Brian