A Power of Attorney (POA) is a written instrument that allows the “Principal” to authorize the “Agent” (Attorney-in-Fact) to conduct certain business on his/her behalf, i.e. sign legal documents, collect and deposit money. This is a powerful grant of authority and requires strict adherence to issues of execution and the specific authority granted.
1. What are the types of Powers of Attorney?
- General – broad powers allowed (acting on behalf of person who is mentally incapacitated, representing person on military leave). These are generally not acceptable in real estate transactions.
- Special (Limited) – very specific powers are authorized (representing a person at a real estate closing). Most closing attorneys and title companies will require a Special Power of Attorney. The best course of action is to have the closing attorney prepare the POA, but if that is not possible, make sure the closing attorney reviews the POA well in advance of the closing.
- It is best to have the closing attorney provide the form.
- Lender approval is required. Put the lender on notice that a POA will be used.
- Make sure all the blank sections (dates, county, etc.) are completed.
- There must be two witnesses (one unofficial and a notary) and each must witness execution. Notary seal must be affixed to the document. IMPORTANT: IF THE NOTARY ATTACHES AN “ACKNOWLEDGEMENT FORM” THEN THERE MUST BE SPECIFIC LANGUAGE USED. PLEASE HAVE THE CLOSING ATTORNEY REVIEW THE LANGUAGE PRIOR TO THE POA BEING EXECUTED TO AVOID EXTRA WORK. THE NOTARY MUST SEE THE PERSON GRANTING THE POWER OF ATTORNEY IN PERSON.
- Grantor must sign exactly as name is printed, provide Social Security number, and include a photocopy of a picture ID (driver’s license or passport).
- Make sure that a valid legal property description is attached to the document (contained either within the body of the document or as an attachment). If an attachment, the legal needs to be initialed.
3. What is the form of the signatory?
John A. Smith by Jane B. Smith as his Attorney-in-Fact
(Or other form as prescribed by the Lender)
Important Note: The executed document and copies of ID should be faxed to the closing attorney’s office immediately after execution (and well in advance of the closing) for review. The original must be brought to the closing or sent in advance.