Proper Use of a Power of Attorney

Escrow Agreement

A power of attorney grants authority to another person, as agent, to do all acts on behalf of the principal as described in the power of attorney. A power of attorney should only be used for a real estate transaction when it is extremely difficult or impossible to obtain the execution of the documents by the principal. With the existing ease of sending documents via overnight mail, electronic mail, and facsimile, it is only in the rarest of circumstances that a power of attorney should be relied upon in connection with a real estate transaction.

A power of attorney must be executed with the same formality of the instrument to be executed under it. Since a deed requires two (2) subscribing witnesses and an acknowledgment by a Notary Public, so too must the power of attorney be executed by the principal in the presence of two (2) subscribing witnesses and an acknowledgment by a Notary Public. By the time the principal can sign a power of attorney in the presence of two (2) subscribing witnesses and a notary public, the principal can in most circumstances sign the deed and other closing documents instead of the power of attorney.

Where the principal’s property is to be placed under Contract, conveyed by deed, mortgaged, etc., the well established rule is that the instrument must name the principal as the Seller, Grantor, or Mortgagor, as appropriate, and it must be clear from examining the entire instrument that it is an act of the principal, not the agent. The preferred method of execution of the instrument is for the agent to sign the principal’s name by himself, as agent, e.g. “Steven R. Greenberg, by John Doe, his attorney in fact”.

The power of attorney must be specific, i.e. it should plainly state the clear authority for its particular use in the transaction. The “power to sell real and personal property” does not include the power to execute a deed to convey title to the property. Instead, the power of attorney should expressly state that the attorney in fact is authorized to “convey title” or to “execute and deliver a deed” to any real and personal property which I may own in order to be effective for this purpose.

A copy of the power of attorney should be delivered to the closing agent at the earliest opportunity to confirm that it will be sufficient for its intended use. Often times, the closing agent is presented with the power of attorney either close to the Closing Date or worse, at the closing, only to find out that the power of attorney will not be adequate for the transaction. While the power of attorney may be sufficient in another state where it was prepared and executed, the laws of the State of Florida will control in the determination of whether the power of attorney will be sufficient for the transaction. Also, many lenders will not allow the borrower (buyer) to execute loan documents under a power of attorney.

It is also important to remember that the original power of attorney will have to be recorded in the public records of the County in which the property is located. A conveyance, transfer, mortgage, or lease, of real property under an unrecorded power of attorney is not valid against creditors or certain purchasers for valuable consideration and without notice.

The power of attorney is revoked by the death of the principal. Also, a durable power of attorney may be relied on until such time as the principal dies, or revokes the power, or is adjudicated incapacitated. Furthermore, the power of attorney may terminate by its own terms if there is a termination date set forth in the power of attorney.