Acquisition of immovable property with the use of a power of attorney but without authority

George Coucounis describes how any acquisition of an immovable property can be cancelled and it could be ordered to be returned to its owner.

When a person grants a power of attorney to another, he should act cautiously and restrict or limit its use in order to avoid the misuse of it by the representative for other purposes and for depriving his property. In particular, the person giving the power of attorney must be certain of the authorities given to the representative, limit the time of its use and restrict the representative of using it for acquiring the principal’s immovable property. The love, affection or trust that a person enjoys shouldn’t influence anybody to grant a power of attorney in a general form and for unlimited time, even if it is given to a close relative. No one can be certain on how the representative will act in the future. Therefore, it is wise for the principal to cancel the power of attorney when it is no longer necessary, so that it will not be re-used and avoid any unwanted dispute or litigation that may arise between the principal and his representative. The misuse of a power of attorney is usually observed between family members concerning immovable property which initially belonged to the family or it was donated to them.

The power of attorney creates a relation between the principal and the representative, that of representation, which according to article 14 of the Law of Contract, Cap.149, a representative is the person authorised to complete an action on behalf of someone else or represent a third party during a transaction. The person who on his account the action is completed and who is represented in a transaction is called the principal. Article 171 and the others following of the same law, expressly state that the representative is obliged to always act under the instructions and the authority of the principal, exercising due skill and diligence. He also has the duty to contact the principal and to inform him of his actions. The representative, who acts in contrast with the principal’s instructions and authority, is under the obligation, in case a loss or damage is caused to the principal to restore it. Furthermore, he is obliged to give an account to the principal and provide him with any profit gained. In the case a loss or damage is caused to the principal due to the negligence of the representative or because of lack of due diligence or in case of any offence committed, the representative is obliged to reimburse and compensate the principal. The measure of damage is the real loss or damage the principal has suffered as a result of the actions or neglects of the representative.

The case law concerning the above issue is analyzed in the recent judgement delivered by the President of the District Court of Larnaca, Mr C. Clerides. In particular, in 1979, there was a division of a family property and the parents of the plaintiff, who lives in Australia, transferred into her name four pieces of land, using a power of attorney given by her to her father. In 2000, her father re-used the power of attorney and transferred the same properties from the plaintiff to his son, the plaintiff’s brother. The plaintiff considered the transfer illegal, dishonest and unlawful and she filed an action asking for the cancellation of the transfer which was made by her father to his son as a donation from her to him, a donation that deprived the plaintiff of her properties. The Court in evaluating the way the father-representative had acted, concluded the following:

There wasn’t any prior instruction or subsequent ratification by the plaintiff to her father to proceed in the transfer of her properties. The transfer of the four pieces of land was made with full knowledge of the representative who acted in detriment of the plaintiff’s rights since (i) the transfer was made without the consent or will of the plaintiff, who being the owner of the properties, had no intention to donate her properties to her brother, and (ii) with the aforementioned transfer, the plaintiff was deprived of the properties given to her by her family and her representative – father acted without authority to her detriment and not to her benefit.

The father acted dishonestly in exercising his decision in order to deprive the plaintiff of her properties so that to acquire them himself. The father’s arbitrary decision was certainly a violation of both the spirit and the letter of the power of attorney which did not authorise him to do so. The plaintiff had never consented or accepted such an arrangement and her properties were registered onto her brother’s name who did not claim them, thus, the return of the properties to the plaintiff was ordered by the Court.

About the author

George Coucounis

George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus. Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.

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