Is Your Power of Attorney powerful enough?

When one party cannot be present to sign documents in a real estate transaction, a Power of Attorney (POA) can be used to allow another person to sign as agent, or attorney, for the “absent” party. Most people have heard of POA’s, but there are a few misconceptions I’d like to address.

Some people have POA’s for their spouses, siblings, or parents that allow access to accounts, records and the like. For a POA to be valid and usable in a real property transaction, the POA must contain specific language allowing the appointed agent or attorney to sell or purchase the exact property involved in the transaction. It is common for the escrow officer to hear from a buyer or seller that they “already have a Power of Attorney.” The Escrow Officer must obtain a copy of the POA and have the Title Officer determine if it is valid for the transaction at hand. Most times, these types of POA’s cannot be used in the real estate transaction.

Escrow Officers can prepare a specific, or Special Power of Attorney that deals only with the real property in the escrow. The person granting the POA needs to sign the document in front of a notary and a witness. With the rise in fraud over the last few years, many Title Companies require the POA be signed in the presence of a Title Company employee or a notary approved by the Title Company. If a POA is being used by a borrower, the lender must also approve the POA being used. All of this needs to be considered if a POA is necessary.

Finally, many people hold title to real property in trusts. Most trusts do not allow the use of POA’s to transfer real property. In this case, the parties to the contract MUST sign the documents transferring the property themselves. If a trust is involved, find out early if a POA is allowable, rather than waiting until the last minute.

Title insurance companies issue insurance (I know, kind of a “duh” statement). For the policy to be issued, care is taken to insure that only those legally authorized to transfer or purchase real property execute deeds and deeds of trust. This is the reason that POA’s are examined so closely.

As always, check with your title professional or attorney if you have further questions.