AFS question?

Jason10468

New Forum Member
REIN Member
Nov 20, 2016
4
2
3
#1
looking at a AFS schedule and item #9 says:
Seller will execute complete power of attorney to buyer if unpaid sellers equity minus balance of sellers existing mortgage is less than $50 000.

Can someone explain to me this clause and why it's needed?

Thank you in advance for any help you can provide.

Jason
 
Likes: GaryW

BarryMcGuire

Inspired Forum Member
REIN Member
Aug 22, 2007
304
12
18
Edmonton, Alberta
#2
The reason we have this clause in the schedule is mostly aimed at what we call 'low equity/no equity AFS'. In fact, in most of the AFS deals we see, the seller has very little equity. With no equity, the seller has little motivation to be ready, willing and available to sign transfer documentation when the AFS matures 2 or 3 or 4 years down the road.

Next, it works better for the AFS buyer if they have full control of the property. With a Power of Attorney, the AFS buyer can register the P of A on title, which prevents the seller from dealing with the property, good protection for the AFS buyer. Plus, the Power of Attorney gives the AFS buyer absolute authority to deal with any underlying lender, property management companies, or any other entity that would demand the AFS buyer prove they have authority to deal with the property.

Hope this helps.
Barry