Power of Attorney in Malaysia: Types, Uses and Legal Requirements

A power of attorney (POA) is a legal instrument that authorises one person, known as the donee or attorney, to act on behalf of another person, known as the donor or principal. In Malaysia, powers of attorney are commonly used in property transactions, business dealings and personal matters where the principal cannot be physically present or wishes to delegate authority. The Powers of Attorney Act 1949 and the Powers of Attorney (Amendment) Act 2016 govern the creation, registration and enforcement of powers of attorney in Peninsular Malaysia. Understanding the different types of POA, their uses and the legal formalities involved is essential for anyone considering granting or acting under a power of attorney.

Types of Power of Attorney in Malaysia

Malaysian law recognises several types of power of attorney, each serving a different purpose:

• General Power of Attorney: Grants broad authority to the donee to manage the donor's affairs, including financial, property and business matters. This type of POA is comprehensive but carries significant risk if granted to an untrustworthy person.
• Specific or Special Power of Attorney: Limits the donee's authority to specific acts or transactions, such as selling a particular property, signing documents at the Land Office or managing a single bank account. This is the most common type used in Malaysian property transactions.
• Durable Power of Attorney: Remains effective even if the donor subsequently loses mental capacity. The donor must expressly state in the POA that it is to remain in force despite any subsequent mental incapacity.
• Lasting Power of Attorney: A newer concept introduced through amendments to the law, designed to allow individuals to appoint someone to make decisions about their welfare, property and affairs in the event of mental incapacity. While Malaysia does not yet have a fully developed lasting power of attorney framework comparable to jurisdictions like Singapore, the existing provisions under the Mental Health Act 2001 and the Powers of Attorney Act provide some mechanisms for managing the affairs of incapacitated persons.

Legal Formalities for a Valid Power of Attorney

For a power of attorney to be valid in Malaysia, it must satisfy certain legal requirements. The instrument must be in writing and signed by the donor. Under Section 4 of the Powers of Attorney Act, a POA that is executed in Malaysia must be signed by the donor in the presence of at least one witness, who must also sign the instrument. If the POA is to be used for property transactions involving the execution of instruments that require registration at the Land Office, it must be executed as a deed and may need to be notarised or attested by a Notary Public.

For property transactions in Johor Bahru, a specific power of attorney authorising the donee to execute the SPA, transfer documents and loan agreements on behalf of the donor must be registered at the High Court under the Powers of Attorney Act. Registration provides public notice of the existence of the POA and allows third parties to rely on it with confidence.

Uses of Power of Attorney in Property Transactions

Powers of attorney are frequently used in Malaysian property transactions where the buyer or seller cannot attend to the execution of documents personally. Common scenarios include overseas property owners who wish to sell their property in Malaysia, buyers who are working abroad and cannot sign the SPA in person, and elderly or infirm individuals who are unable to travel to the lawyer's office or the Land Office. The donee, acting under the POA, can sign all necessary documents, attend court hearings (if required) and complete the registration process on behalf of the donor.

It is important to note that some financial institutions may have their own requirements regarding the use of POAs in loan transactions. Banks may require the donee to execute the loan agreement in person and may not accept a POA for certain aspects of the lending process. The conveyancing team at Messrs S K Song can advise on the specific requirements for using a POA in your property transaction.

Revocation of Power of Attorney

A power of attorney may be revoked by the donor at any time, provided the donor has the mental capacity to do so. The revocation must be in writing and should be communicated to the donee and any third parties who may have relied on the POA. If the POA was registered at the High Court, a deed of revocation should also be registered. A POA is automatically revoked upon the death or mental incapacity of the donor, unless it is a durable POA that expressly provides for its continuation. A POA is also revoked if the donor becomes bankrupt or if the purpose for which it was created has been accomplished.

Risks and Safeguards

Granting a power of attorney involves a significant degree of trust, as the donee has the legal authority to bind the donor to transactions and obligations. To minimise risk, donors should consider the following safeguards: grant a specific rather than a general POA, include an expiry date, appoint a trusted family member or professional as the donee, and monitor the donee's actions where possible. If you suspect that a donee has abused a power of attorney, you should seek legal advice immediately. The lawyers at Messrs S K Song can assist in revoking a POA and, if necessary, pursuing legal action to recover any losses.