Expired special power of attorney has no legal effect

July 18, 2013 9:29 pm

Dear PAO,
I am planning to buy a house and lot. The person who is transacting with me bought it from the original owner, but the title of the property is still under the latter’s name. He presented to me a Special Power of Attorney for the sale of the property which was signed by the original owner. However, the Special Power of Attorney is already expired as it is indicated in the document that its validity is only one year from the date of the sale of the property to my seller. How do I go about it? How long will it take to transfer the title of the property?
Adrian

Dear Adrian,
It is quite common in commercial transactions that a Special Power of Attorney (SPA) is used when the person selling the property is not the owner thereof. In particular, Article 1878 (5) of the New Civil Code provides that an SPA is necessary for a party to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration.

However, the agent who is holding a Special Power of Attorney must act within the scope of the authority granted him as well as within the time frame he is permitted to act. He cannot bind the principal if he acts beyond what was authorized of him or beyond the period stipulated in the SPA. Moreover, our law provides that one of the modes of extinguishment of the agency is the expiration of the period for which the agency was constituted (Article 1919 (6), id). Hence, any act by virtue of an expired SPA has no legal effect whatsoever. Accordingly, it is not advisable for you to purchase the house and lot on the basis of the SPA that was presented to you considering that the authority granted by the named owner has already lapsed.

Nevertheless, you may insist from the seller of the property to settle first the transfer of the title of the property under his name before you push through with the purchase thereof. Besides, he should find no problem concerning the transfer of such title under his name considering that, as you have mentioned in your letter, he bought the said property from the original owner. By virtue of their contract, he has already acquired the ownership of the subject property.

We cannot say, though, with certainty how long it would take for him to have the transfer of the title of the property under his name as it is dependent on his vigilance in making the necessary arrangements insofar as the payment of the appropriate taxes relative to his transaction with the original owner is concerned as well as with the registration of such transfer with the Register of Deeds of the place where the property is situated.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.