Validity of a Power of Attorney

Validity of a Power of Attorney

The validity of a power of attorney is an issue concerning many persons, physical or legal, who use Cyprus for investment and business purposes.

They are worried whether their transactions in Cyprus or abroad are valid or if they will be declared null and void due to the power of attorney given by them not being legally certified. The issue is quite serious, since it affects the safety of their business transactions and no one can depend on the counterparties’ good will. They are quite right to be concerned on how they can resolve the issue so that not to find themselves later in an unpleasant situation involving them in risky situations.

Many people and companies use power of attorneys to transact, prepare and sign minutes, resolutions, declarations and other documents which are not legally certified, since the persons signing them either are not present at the time of the certification or they are not known to the certifying officer. The question arising is whether these transactions are valid or not.

There are declarations, documents or transactions conducted by a representative whereby the law does not require his authority to be written and certified by a certifying officer. On the other hand, the law in other cases requires such authority to be written and legally certified in the form of a power of attorney and if not, the transaction performed may be declared null and void. The issue may also be examined on whether a party ratified or disowned the transaction or whether, due to his behaviour, the principal is estopped from denying the validity of an act or a transaction, either by conduct or through the principles of equitable or proprietary estoppel.

According to the Contract Law, an “agent” appointed to do any act for another or to represent another in dealings with third persons, his authority may be expressed or implied and no consideration is necessary to create an agency. An authority is said to be expressed when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case and the things spoken or written, or the ordinary course of dealing may be accounted circumstances of the case.

An agent having authority to do an act has authority to do every lawful thing which is necessary to do such act. An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting such business. Moreover, an agent has authority, in an emergency to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own cases, under similar circumstances.

With regard to immovable property, for the declaration of the agent to be accepted, either for the transfer or the mortgage of a property, the law requires the agent to submit a written authorisation/power of attorney legally certified by a certifying officer in accordance with the provisions of the Certifying Officers’ Law. Consequently, if such authorisation/power of attorney was not legally certified, it may cause the transfer or the mortgage of the property to be declared null and void.

Therefore, people must be very careful when becoming agents for another person, the power of attorney signed to be legally certified. Moreover, when acting as agents, they should inform their principal of their acts so that not to leave any room to the principal to question them. By doing so, the principal, being aware of the act, will be obliged to ratify it and such ratification may be expressed or implied in the conduct of the person on whose behalf the act was done. If the principal elects to disown it, he must do so immediately, otherwise he will be considered as having ratified it.

For a power of attorney or other written authorisation to be considered as legally certified

• (a) the principal must sign or seal it in the presence of the certifying officer,
• (b) the principal must be personally known to the certifying officer or if not,
• (c) his identity must be attested by two persons who are personally known to the certifying officer, who shall sign the document as witnesses to the seal or signature of the principal party.

The provisions of the law are strict and unambiguous referring to a pre-existing personal acquaintance other than the introduction at the time of the signing. Therefore, when a power of attorney is accepted by the Land Registry, this does not imply that the transfer or even the mortgage of an immovable property is valid, since the Land Registry is not in a position to identify whether the person granting the power of attorney was personally known to the certifying officer. The transaction depends on the subsequent behaviour of the principal party, whether he will accept or question it.