Risks of a Transaction by Power of Attorney and How to Control the Representative

The main risk of a transaction by Power of Attorney lies not in the representation itself, but in the combination of broad powers and weak control. A representative may legally sign documents on behalf of the buyer within the scope of the powers granted, so the transaction terms, payments, reporting and access to originals should be defined before the Power of Attorney is handed over.

• What risks arise most often
• How to divide powers
• How to establish reporting
• How to control payments
• How to control documents and originals
• How to prepare for revocation of powers
• What signals require the transaction to be stopped
• Glossary
• Frequently asked questions
• If you need legal assistance to control the transaction

What risks arise most often

The risk increases when one person selects the property, recommends the seller, changes the contract, receives the money and reports only verbally. Even an honest representative may find it more difficult to notice their own mistake without an independent review.

How to divide powers

Dividing roles does not require a large team. It is enough to remove incompatible functions from the hands of one participant.

• Buyer approves the property, price, contract and each major payment.
• Lawyer checks the seller’s title, documents, contract and registration actions.
• Technical specialist inspects the property and records defects.
• Representative performs only the listed instructions and provides supporting documents.
• Bank processes payments on the buyer’s instructions and leaves a verifiable trail.

If the lawyer is also the representative, they may perform legal and registration actions. However, the decision to change the price, waive a claim against the seller or accept a serious defect should remain with the buyer unless otherwise knowingly agreed.

It is useful to prepare not only a Power of Attorney but also a separate instruction. It should specify contact details, the approval procedure, reporting deadlines and the actions to be taken if the wording of the contract conflicts with instructions from third parties.

How to establish reporting

The phrase “keep me informed” does not create a clear standard. For each stage, define the result and the deadline for providing it.

The buyer should have direct access to a shared archive. Documents must not exist only on the representative’s phone. It is better to begin file names with the date and stage so that the sequence of events can be reconstructed.

How to control payments

The safest option is usually for the buyer to transfer the money independently using the bank details from the verified contract. The representative prepares the basis and confirms that the stage has been reached, but does not control the entire budget.

1. Separate the property price, taxes, fees, commission and legal services.
2. For each payment, specify the recipient, amount, currency, deadline and condition.
3. Compare the bank details in the contract and confirm any changes through an independent channel.
4. Do not transfer money based on a photograph of a piece of paper or a message from a new number.
5. State a clear payment purpose and retain the bank document.
6. For cash payments, require a written basis, authority to receive the money and a receipt.

If the representative pays mandatory fees from an advance, set a limit and prohibit the use of the remaining funds for other purposes. After each payment, they must provide an official receipt and return the unused balance together with a report.

Do not agree to combine the property price and intermediary services into one opaque transfer. The buyer should understand to whom and what they are paying for.

How to control documents and originals

Prepare a register of originals before handing them over to the representative. For each document, specify the number of pages, number, date, current holder and expected return date.

• Power of Attorney and documents confirming its certification;
• contract and additional agreements;
• Search, copy of the title and cadastral plan;
• receipts for payment of taxes and fees;
• confirmation of contract registration;
• number and materials of the application for permission;
• handover certificate and transfer documents;
• issued title after completion of the transfer.

The scan must show the entire document, including the reverse sides, certification statements, stamps and appendices. A photograph of the first page does not confirm the contents of the remaining pages.

Originals should be sent by tracked courier or handed over in person against a receipt. If a document remains with the lawyer for the next stage, the buyer must know the basis and storage period.

How to prepare for revocation of powers

The revocation procedure depends on where and in what form the Power of Attorney was prepared, as well as where it was used. Therefore, it is better to find out the procedure while preparing the document.

1. Ask the lawyer which document is used to formalise the revocation.
2. Make a list of the authorities, banks, sellers and other persons who received the Power of Attorney.
3. Determine the method of confirmed notification for each recipient.
4. Require the return of the originals and unused certified copies.
5. Keep the notices, delivery confirmations and response documents.

A message to the representative in a messenger may record the buyer’s intention, but by itself it does not guarantee that the document can no longer be used before third parties. A procedure recognised by the applicable law and the receiving organisations is required.

The validity period does not replace revocation if the powers need to be terminated earlier. After the assignment is completed, verify that the representative has provided the final report, originals and access credentials to electronic systems.

What signals require the transaction to be stopped

• the representative refuses to show the draft document before signing;
• the property details in the Power of Attorney do not match the title or contract;
• a new recipient of the money appears without a written basis;
• the price or currency changes on the day of signing;
• the buyer is rushed into granting the right of sub-delegation or receiving cash;
• there is no confirmation of registration or application number;
• the handover certificate is offered for signing before the inspection;
• the originals are retained without explaining the period and purpose;
• the representative does not disclose their connection with the seller or developer.

Stopping does not automatically mean refusing to purchase. It gives time to obtain documents, independent advice and a written explanation. The transaction should continue only after the discrepancy has been resolved.

Related materials: remote purchase, buyers’ mistakes, Search check and actions after receiving permission.

Glossary

• Power of Attorney: a document granting the representative a specified list of powers.
• Conflict of interest: a situation in which the representative’s personal or business connection may influence their decisions.
• Sub-delegation: the transfer of powers to another representative, where permitted.
• Revocation of a Power of Attorney: the formal termination of previously granted powers in the established procedure.
• Apostille: confirmation of the authenticity of an official document for international use in applicable cases.

Frequently asked questions

Can I entrust the transaction to someone I know?

Yes, if the form and powers are accepted for the required actions. Personal acquaintance does not replace document checks, written instructions and reporting.

Does the representative have to receive the money?

No. The buyer may pay independently. If receiving or spending money is necessary, the power should be limited by amount, purpose and a mandatory report.

How often should I require a report?

After every legally or financially significant action. For a lengthy procedure, also establish a regular brief status update, for example once a week or once a month.

Can sub-delegation be prohibited?

Yes, if this is consistent with the selected form and tasks. If a substitute is necessary, it is better to name a specific person or criteria and require the buyer’s prior consent.

What should I do if the seller’s bank details change?

Do not pay until written confirmation has been received through an independent channel and checked by the lawyer. A message in an existing correspondence may be the result of hacking.

How can I control the handover?

Approve a checklist in advance, require photos and video, meter readings, a list of defects and the draft certificate before signing.

Is limiting the validity period of the Power of Attorney enough?

No. There should also be limitations on the property, price, actions, payments and sub-delegation. If the powers need to be terminated early, a revocation must be formalised and the recipients notified.

If you need legal assistance to control the transaction

You can contact our legal partner, DeJure, for a consultation with a lawyer licensed in North Cyprus.

Telephone: +90 539 119 05 55

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