Avoiding Power of Attorney Pitfalls

Often, a buyer or seller is not able or does not desire to be present for a real estate closing.  A power of attorney (“POA”) can be a very useful tool in these situations, as it allows another person to sign in a party’s stead.  However, it can also become one’s worst nightmare if not handled properly.

A defective POA, or the improper use of a POA, is a very common cause for lengthy closing delays, and in some cases can cause a transaction to fail altogether.  The most common problem is a defective form.  Many people get their form POA from office supply stores, a Google search, or even use a form from another state.  If the form does not meet Florida’s very specific statutory requirements, it may not be used at closing.  In Florida, the POA must include the signatures of two witnesses and a notary.  If your client lives in another state and sends a POA to use for a real estate transaction, additional legal documentation must be provided before it can be used in Florida, and there is a chance that the POA cannot be used at all in this state.  Further, most insurance underwriters go beyond the statutory requirements with even stricter guidelines for use of a POA.  For instance, the underwriter will require an original POA for recording. A copy will not suffice.

Another problem can involve the person who has been asked to act as a POA. How often has a realtor or closing agent been asked by a client to act as the client’s POA in a transaction? The answer is probably quite often, but because of recent changes to Florida law, it is illegal in Florida for any person with a financial interest in a transaction to act as a POA.  In other words, it is illegal for a real estate agent who expects to receive a commission at closing, or a closing agent who expects to earn a title premium at closing, to sign as POA for their client.  Also, if a property is owned by a trust or a corporation, a POA cannot be used in most instances under Florida law. Do not assume that simply because a POA appears to have been properly executed that it can actually be used.

Because of the many pitfalls that can occur with a power of attorney in a real estate transaction, and the fact that its improper use could be illegal, we strongly advise that a party submit the original POA to the attorney handling the closing with the contract.  This allows the closing attorney time to review and address any issues with the POA immediately, and more importantly, make sure that no one is engaging in the illegal (albeit unintentional) use of a POA. Too often, the closing attorney receives the original POA too late in the process to correct any problems without delaying the closing.

As always, if you have any questions concerning the foregoing, we urge you to consult with your real estate attorney.

Sincerely,

Berlin-Patten, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com

SARASOTA

3700 S. Tamiami Tr, Suite 200, Sarasota, FL 34236   P (941) 954-9991  F (941) 954-9992

VENICE

247 S. Tamiami Trail, Suite 201, Venice, FL 34285  P (941) 955-9991  F (941) 484-9992

LAKEWOOD RANCH

8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024

 

 

Did you find this real estate law content useful, but need actual legal counsel?

Speak to a real estate attorney!

,

Congratulations On Your Loan Approval… Now What?

Paragraph 8 FINANCING in both the “AS IS” and the “Standard” FR/BAR Contract* is the section of the Contract dealing with financing of a purchase by a Buyer. The purpose of seeking financing is to obtain approval for a loan, thereby permitting the Buyer to close on the Contract. This is defined under the Contract…

Permitted To Close

Open permits, expired permits and code enforcement violations can wreak havoc on a closing when not properly addressed. Picture this scenario… contract negotiations were a breeze, the inspection results were perfect, title came back clean, and closing is looking oh so smooth. Then, out of seemingly nowhere, the municipal lien and permit search results reveal…

Making a Listing, and Checking it Twice

So you just finalized a listing agreement for an exciting property that you can’t wait to advertise to the world for your customer. Like any good listing, you really want this one to stand out among the other similar listings in the area. After spending time at the property and with the owners it is…

Time (Of The Essence) Is On My Side, Yes It Is…

Contracts are full of language that may seem unimportant, boilerplate, confusing, or just plain useless. Real estate contracts are no different. The standard FAR/Bar forms for sale and purchase of residential property, “AS IS” contracts, and even vacant land contracts all contain provisions that you see all the time, but rarely have to really address.…

E-Sign Me Up

  Where would we be without technology? The current pandemic has demonstrated how integral technology is to thrive in the real estate business. Such a vast array of tasks can be done electronically: sending wires, signing closing documents, remote online notarization, virtual open houses, signing contracts, etc. When a buyer and/or seller signs a real…

All That Glitters Is Not Gold

The COVID-19 pandemic (a/k/a the “coronavirus”), has hit very close to home when it comes to homeowners being able to make their mortgage payments on time (or at all). Where many Floridians are being furloughed or laid off from their employment, there is increasing anxiety over how that 1st of the month mortgage payment is…

Homestead Exemption Revocation: Welcome to Florida, Now Pay the Tax Man!

  Knock, knock, BOOM…this is the sound you hear when opening a notice of tax lien from your local property appraiser. The property appraiser’s letter states that you have 30 days to pay taxes, penalties, and interest, or there will be a tax lien filed on your home. There must be some mistake…how did this…

Do You Have 2020 Vision for Your Closing?

On behalf of the entire BPE family, we want to wish everyone a Happy New Year. Its times like this where it can be helpful to reflect on the prior year, and since this year is 2020 (presumably the year of “perfect vision”), let’s take a step back and reflect on those instances where the…

Estate Planning, What’s That?

The third week of October is National Estate Planning Awareness Week, a week to highlight one of the most overlooked areas of personal finance management – estate planning. Truth is, everyone has an estate; however, it is estimated that over 50% of Americans do not have an updated estate plan or a plan the reflects their…

It’s Not Over Until It’s Really Over…Selling Real Estate After A Divorce

As you all know, real estate professionals constantly wear an abundance of different “hats.” Working in the real estate world demands that real estate professionals have at least a minimal understanding of a variety of topics including, but not limited to, family law, wills, trusts and estates. Even with divorce rates slightly declining, it is…

When Is It Critical To Review Your Estate Plan, and Why?

Just like other important life tasks, your estate plan deserves your time and attention. It’s important that you work with us to review your estate plan at least once a year. Think of this as your estate plan’s annual physical exam, and remember-prevention is the best cure. An annual exam isn’t necessarily the only time…

Color Of Authority To Sign Listing Agreements & Contracts

A contract (which, for purposes of this Blog shall focus on Listing Agreements and Residential Contracts For Sale and Purchase), is only as good as the authority of the Seller and/or Buyer to sign them. Many times, I receive calls from agents asking who has authority to sign the Listing Agreement, and then the Contract…

Insurance Considerations as Hurricane Dorian Approaches

As Florida braces for the possible threat of Hurricane Dorian, we encourage you to take all necessary precautions to ready your loved ones and homes for potential impact. If you are purchasing property, or representing a buyer of a property, that is set to close in the near future, we urge you to contact your…

No Leaks, No Damages, No Problems!

  Congratulations!  Your client entered into a new Standard FARBAR Contract on the purchase of a single family home in Sarasota.  The only contingencies are inspections and marketable title. Your client immediately hires a professional home inspector to conduct their home inspection.  During the Inspection Period the home inspector provides a “clean” report only notating…

The Repair Escrow Agreement: Having Your Cake and Eating It Too

In Florida, more likely than not a buyer will identify his or her requests for repairs early in a real property transaction and prior to closing pursuant to the standard FAR/BAR contractual provisions with little fanfare. Nonetheless, as in life and in realty, there are unforeseen circumstances where a closing extension would be difficult and…

“Options? We All Got ‘Em, We All Want ‘Em, What Do We Do With Them?”

We see option contracts for real estate purchases frequently, and we run into problems with those contracts just as frequently. In this blog we’ll go over what option contracts are, what they require to be effective, and we’ll identify some common pitfalls. An option contract is a promise by the owner of property to sell…

New Construction, Review Before You Execute

  New construction agreements can be extremely complicated and it is important that the buyer have a thorough understanding of the contract and terms prior to executing.  The construction agreements provided by developers are typically one sided and do very little to protect the buyer/owner in the event that an issue should arise.  It is…
Real Estate Firm

Your Condo Purchase-Treat It As An Investment

Condominium purchases by their nature involve property rights that are more complicated than typical single family lots or properties.  We have written several blog articles relating to investigations that buyers and their realtors should undertake prior to their purchase (links are included at the end of this blog). It is said that ownership of real…

Check Out My Title While BPE Resolves It!

One of the most frequent questions we receive from realtors involves the status of title to the property. The answer to the question “how is title” can be a source of great anxiety or a source of great relief. As a result, most people involved in any real estate transaction want the answer to that…

Breaking News! “RON” Remote Online Notarization is coming to Florida

  The much-anticipated remote online notarization (“RON”), is set to arrive in Florida as of January 1, 2020. Florida will join the ranks of twenty-three other states that have either passed or have pending bills that allow online notaries to perform notarizations anywhere in the world (Alabama, Florida, Idaho, Illinois, Indiana, Kentucky, Michigan, Minnesota, Mississippi,…

Look Before You Leap…Into A New Listing!

Real estate transactions can often be quite complicated and confusing for even the most savvy of Sellers and their agents. You would think that the most basic and straightforward step in the process would be determining who are the owners and who has the authority to convey the property and sign related paperwork, such as…

LOOK BOTH WAYS BEFORE YOU WALK AWAY FROM A DEAL

While it may not happen often, on occasion we have experienced situations where one of the parties “walks” from the transaction.  In this instance, the buyer or seller is often left in a difficult position and wondering what remedies they may have against the breaching party, if any.  A well drafted contract will typically set-forth…

“Up a Stream without a Paddle-Closing without Title Insurance”

The immense value of title insurance has been well documented. Generally speaking, title insurance provides three somewhat distinct, yet significant coverage’s: Fatal title defects that could cause one to lose their property altogether, such as fraud, forgeries, inheritance issues, or execution/signing issues; Defects that could require the expenditure of significant amounts of money to cure…

Six Things You Need to Know about Buying Rental Properties (#2 will surprise you)

When a Buyer is purchasing a residential rental property such as a multi-unit building, they often have many questions about their rights as the new building owner and landlord.  The Buyer may also wonder whether the standard FR/BAR real estate contract is the appropriate contract for them and what protections it affords them.  Below is…

Properly Utilizing a Limited Power of Attorney

A Power of Attorney is a useful tool that allows a person to legally take some action on behalf of another in a specific situation. There are several types of Powers of Attorney (General, Limited, Durable, etc.) but the focus of this blog will be on LPOAs (LPOA) as they are more commonly utilized in…
Do We Have a Deal

Do We Have a Deal?

Question:  When is a contract not a contract, even if supposedly “everyone” has signed? Answer: When the wrong people sign. With all the different ways one can own property these days, a common issue that often is overlooked is identifying the proper parties to sign a contract.  To be bound by a contract, the signing…

Utilizing Powers of Attorney in Real Estate Transactions

A Power of Attorney is a legal document delegating authority from one person to another. The “Principal” is the person who is delegating authority to another person to act on his or her behalf, and the “Agent” is the person who receives the power to act on behalf of the principal. The Agent is sometimes…

Flood Insurance Reform Act of 2012

In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (“Act”) which requires FEMA, as well as other agencies, to change the way the National Flood Insurance Programs (“NFIP”) is run. The Act was designed to reduce the NFIP’s growing debt. Key provisions of the legislation require the NFIP to raise rates to…

Don’t Forget the Open Permit Search!

For financial reasons most parties do not perform an Open Permit search (which would include expired permits) until after the inspection period has expired.  This is a common mistake that generally leads to the buyers inability to object to an open permit issue at a later date.  The new FARBAR-2 Residential Contract for Purchase and…
Menu