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I've got the power
By Byron Rose - Rose and Jones

Buyer’s agents and lay agents for buyers sometimes use a power of attorney to bid on a client’s behalf at an auction. The REINSW Buyer’s Agents Chapter has reported that occasionally this causes difficulties at auctions due to confusion about what a power of attorney entitles them to do. Here’s a guide to help sort out the issues. 

What is a power of attorney?


A power of attorney is a formal legal document by which one person (the Principal) gives another person or persons (the Attorney(s)) the power to represent them and act in their place.car

Section 9 of the Powers of Attorney Act 2003 provides:

     (1)  Subject to this Act, a prescribed power of attorney confers on the attorney the authority to do on behalf of the principal anything that the principal may lawfully authorise an attorney to do.
(2) A prescribed power of attorney has effect subject to compliance with any conditions or limitations specified in the instrument creating the power.

This means that a person with a power of attorney has the ability to make decisions on the other person’s behalf – usually in a specific situation. Power of attorneys can have limitations, or they can be unlimited. 

For example, a client may give their buyer’s agent a power of attorney, which only confers authority to bid on their behalf at an auction up to a certain limit and then to sign the contract if the buyer’s agent is the highest bidder. Sometimes, the price limit is contained in another document. Sometimes, there is no limit specified and the attorney’s powers are unlimited.

Attorneys must be very careful to act in accordance with any conditions or limitations a Principal chooses to impose. If an attorney acts outside their authority, the attorney may face personal liability for any loss the Principal suffers.  

Who might want to use a power of attorney?

A buyer who cannot be physically present at the auction (due, for example, to them being overseas or in hospital) might wish to give a power of attorney to someone who can actually be there.

Alternatively, the buyer might choose not to be physically present at an auction to avoid being recognised. Here are some examples:

  • the buyer might be a celebrity or well-known in the business community;
  • the buyer might have previously negotiated to buy the property but the deal fell through – so the vendor knows how high the buyer was previously prepared to pay;
  • the buyer might be a developer who had already bought five houses in a row and wishes to buy the sixth – and their presence might encourage the vendor to lift the reserve in the hope of a higher price;
  • the property might be one half of a duplex and the buyer owns the other half;
  • the buyer might have a personal conflict with the vendor – perhaps the buyer is an ex-husband or ex-wife, or is involved in a family dispute.
In the above circumstances and many others, the buyer might choose to give a buyer’s agent a power of attorney to attend the auction on their behalf and make bids for the property. 

Signing in 

The most common time for confusion by sales agents when buyer’s agents use a power of attorney at auction is at the time the buyer’s agent completes and signs the Register correctly called the “Bidders Record”. 

Sometimes a buyer’s agent will turn up at an auction and be totally unrecognised. More commonly, a buyer’s agent is known in a particular area, so therefore the auctioneer, selling agent and vendor are likely to know that the buyer’s agent is there on behalf of a client. They’re all curious: who is the buyer’s agent representing?

If the buyer’s agent has a power of attorney, they don’t have to say who they are representing when they sign in. They don’t even have to reveal that they are a buyer’s agent if they don’t want to.

Clause 15(4) of the Property, Stock and Business Agents Regulation 2003 (the Regulation) provides:

     If a person who is registering to bid on behalf of another person will be bidding for the other person under a power of attorney, there is an exemption from the requirement under section 68(2) of the Act that the relevant details of the person bidding include details of the other person as specified in section 68(2)(b) of the Act.

So, when a buyer’s agent acting under a power of attorney turns up at an auction, they only have to record their own name in the bidder’s register. They do not, at this stage, have to provide details of their client or produce a copy of the power.

Note that this exemption only applies if the buyer’s agent has a power of attorney and not just a letter of authority – and there is a difference. 

With a power of attorney, unlike a letter of authority, if an attorney is acting pursuant to a power of attorney they are acting – in a legal sense – for, and on behalf of and in the name of, the Principal when it comes to making decisions in that particular situation. 

Letters of Authority

At first glance a power of attorney and a letter of authority can appear to be similar concepts. Like a power of attorney, a letter of authority enables someone to bid on another’s behalf. For example, a buyer might give their father, brother or friend a letter of authority to bid on their behalf because they lack confidence at auctions – perhaps they’re afraid they won’t be able to keep their cool and will accidentally bid past what they can afford – and so wish for their relative or friend to make the bids instead.

The PSBA Act provides in section 69(1)(b) that a letter of authority must include the prospective buyer’s name, address and identifying number of their proof of identity. This letter of authority must be produced when registering prior to the auction. In the case of a buyer’s agent, their agency agreement can be used instead of a letter of authority (clause 15(5) of the Regulation). The result of using a letter of authority is that the bidder & the person they are representing are both identified prior to the auction. 

Signing the contract

At this stage any anonymity enjoyed under a power of attorney is lost. If the buyer’s agent acting under a power of attorney is the highest bidder they must immediately inform the auctioneer that he or she is acting on behalf of a client and provide the name of that client (section 83 of the PSBA Act). Attorneys should also ensure that they have the original power, or a copy of it certified by an solicitor or a Justice of the Peace, with them at the auction in case they are asked to confirm their appointment which the selling agent must do, and is entitled to retain evidence of (e.g. by requiring or taking a copy of the power of attorney), so that it can be sent to the Vendor’s solicitor with the copy of the contract signed by the attorney in the name of the Purchaser.

A buyer’s agent acting under a power of attorney can usually sign the contract on their client’s behalf as this power is usually given by the power of attorney – but the terms of the power should be checked prior to the auction. When an attorney signs a contract, they can do so by using their own signature.

If buyers agents will be taking further steps in the transaction such as executing a transfer, conveyance or a deed on behalf of the client then the power will need to be registered and advice should be sought from the purchaser’s solicitor or conveyancer.

Using a power of attorney may cause some difficulty if it turns out that the purchaser was someone the vendor did not like. Yet, legally, once the hammer has fallen, the highest bidder is the buyer of the property and the auctioneer does not have the authority to ignore the power of attorney simply because the vendor doesn’t like the buyer. If either party refuses to sign the contract the auctioneer has the power and the duty to execute the contract on behalf of the vendor, the purchaser, or both as a record of the contract formed on and by the fall of the hammer.

Agency agreements 

There have been cases where selling agents and auctioneers have insisted that they sight the written agreement between the buyer’s agent and the client – and have even insisted that they keep a copy.

If the buyer’s agent has a power of attorney, they do not have a legal obligation to show the agency agreement as well. The power of attorney is sufficient proof of the agent’s authority to bid and to sign the contract on behalf of the actual purchaser.

If the buyer’s agent does not have a power of attorney, then they will have already provided a copy, or will have shown either a letter of authority or their agency agreement to the auctioneer before the auction commenced. If, however, the letter of authority did not contain all required details, then the vendor’s agent or auctioneer may request to see the agency agreement as well.

When dealing with a successful purchaser, a vendor or his agent is entitled to insist upon a copy of the document which gives the attorney or purchaser’s agent the power to act for the purchaser and the authority to sign the contract on the purchaser’s behalf – e.g. the power of attorney, the letter of authority or the buyer’s agency agreement. 

For more information, call the REINSW Member Helpline on (02) 9264 2343 or email helpline@reinsw.com.au