Purchasing an Apartment in Israel
via a Power of Attorney
Have you ever wished you can be in two places at once?
We are not discussing Quantum Physics or a metaphysical theory. Rather, in this article we will explain one of the most valuable tools our legal system provides –the “Power of Attorney”.
Sarah was in the midst of boarding a plane to Chicago when she received a call from her secretary requesting that she sign an important business-related legal document. Under normal circumstances, this would be quite difficult for Sarah to procure at the current moment. But like other business owners, Sarah had a valuable “Power of Attorney” arrangement already in place. She simply forwarded the legal document to her lawyer and sat comfortably in her seat preparing for a
hopefully relaxing flight.
So, what is a Power of Attorney?
A Power of Attorney is a legal document in which one party-the principal-authorizes someone else to act as his agent to legally act on his behalf in accordance with the contents of the Power of Attorney.
As per the Law of Agency, "one is authorized to act on one's behalf".
Therefore any action executed by the agent under authority of the Power of Attorney is considered to have been executed by the principal himself. Before you proceed to purchase an apartment in Israel via a Power of Attorney, read the following general explanation about the Power of Attorney arrangement in Israel.
General vs. Special Power of Attorney
A Power of Attorney (POA) comes in several forms.
A special POA limits the agent's authority to specific legal actions, such as proxy voting in a tenant meeting or carrying out specific financial transactions. On the other hand, a general POA grants the agent authority over a very broad range of actions taken on the principal's behalf.
In Israel, a general or special (but not irrevocable) POA becomes revoked if:
The principal revokes it,
The principal dies or becomes incapable of making legal decisions or if
More than a decade has elapsed since the POA was granted.
Irrevocable Power of Attorney
An irrevocable power of attorney is used when someone wishes to appoint an agent to perform on his behalf transactions with a third party. This type of POA is commonly used in real estate transactions in which the seller authorizes an agent to transfer ownership of his property to the buyer. In other words, the principal (seller) appoints an agent (lawyer) to transact on his behalf with the third party (buyer).
Such a POA is, as its name implies, irrevocable. This is so because a third party's rights depend on it.
An irrevocable POA cannot be granted in instances where a third party is not involved, such as for bank transactions.
Notarized Power of Attorney
In general, in order to validate a POA—whether general or specific to a particular real estate transaction—and ensure that it is legally binding, the principal must sign the POA in the presence of an Israeli notary public.
In Israel, a notary is a lawyer with at least 10 years of experience practicing law, and who has undergone a notary certification. However, if the principal has authorized a lawyer to act as his agent by giving him POA, then this lawyer can validate his client's signature. This is considered a notarized Power of Attorney even if the lawyer is not a licensed notary.
A Foreign resident granting a Power of Attorney to an Israeli Lawyer
When someone residing outside of Israel wishes to grant Power of Attorney to an Israeli lawyer, the signed POA can be scanned and emailed to the lawyer for signature validation.
Real estate transactions, however, are the exception to this rule. For a POA to be legally binding in real estate transactions, the lawyer can validate the POA but only if it is signed in his presence. If the client signs the POA abroad, his signature cannot be validated by an Israeli lawyer.
What can one do in such situations? The POA can be validated in one of two ways:
The principal will sign the POA before the Consul Representative in an Israeli embassy or consulate, but this method can be implemented only in countries and cities that have an Israeli consulate or Embassy.
The following method can be done in most countries. The signature must be validated by a notary and apostille in a state that is party to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (aka the Apostille Convention).
The Apostille Convention set guidelines determining the method by which documents from one country would be valid and recognized in another country. This method is as follows:
The principal signs the POA in the presence of a local notary public.
The principal then takes the signed document to an apostille (from the French word meaning "certification"), who certifies the notary's signature in a separate document.
This document states that the notary signed on the document is indeed licensed by the state that issues the apostille, and is authorized to validate signatures.
Not all countries are part to the Apostille Treaty, but most are. The United States, for example, is a signatory state, whereas Canada is not.
**In this article, "his" is replaceable in all cases by "her".