What You Need to Know About a Power of Attorney: It Is Not a Contract, but Proof of Representation

Many people believe that a power of attorney is a contract between the principal and the agent. You can encounter this view not only among clients but sometimes also among lawyers. In reality, however, the situation is somewhat different.

What Is a Power of Attorney and When Is an Officially Verified Signature Required?

A power of attorney is not a contract of representation. It is a document by which the principal proves to third parties that they have authorised a specific person to act on their behalf. In other words, a power of attorney serves as proof of the existence of representation.

The actual legal relationship between the principal and the agent arises on the basis of an agreement on representation. That agreement does not always have to be in writing and in many cases an oral agreement is sufficient. This is precisely why a power of attorney is often mistakenly confused with a contract of representation.

The question of an officially verified signature always depends on the specific purpose of the power of attorney. In some cases the law or the relevant institution requires a verified signature, while in others it does not.

Situations Where an Officially Verified Signature Is Required

• real estate transfers — the cadastral office strictly requires an officially verified signature of the principal by law,
• vehicle registration — the vehicle registry requires an officially verified power of attorney in order to make changes,
• filing a debt relief petition — the insolvency law expressly requires an officially verified signature of the debtor on the power of attorney granted to a lawyer or other authorised person,
• establishing a company — official verification is required for actions of the founder; the establishment itself often takes the form of a notarial deed,
• dealing with banks — for security reasons and their own internal rules, banks almost always require an officially verified signature, unless you sign the power of attorney directly in front of a banker at a branch,
• founding an association or registering in a public register — the signatures on filings for the public register must be officially verified.

Situations Where an Officially Verified Signature Is Normally Not Required

• representation by a lawyer — for an ordinary procedural power of attorney to act before a court or authorities, a simple signature without verification is sufficient,
• probate proceedings — for the ordinary representation of an heir in proceedings before a notary, a simple signature is sufficient; official verification is required only for specific serious acts, such as a power of attorney for the strict renunciation of an inheritance.

General Power of Attorney

A general power of attorney authorises the agent to represent the principal in all ordinary legal matters that do not require a special power of attorney. Its purpose is to make it easier to handle matters on behalf of the represented person without having to issue a new power of attorney for each individual act.

The law generally does not require that the signature on a general power of attorney be officially verified. Nevertheless, we recommend having the signature verified, because some authorities, banks, or other institutions may require a verified signature.