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 estate contract (whether electronically or with a good old-fashioned pen), it is of utmost importance that the person with signing authority executes the contract in his or her correct capacity. If not, the contract is not valid, is completely unenforceable, and will have to be re-executed.

In today’s world, the majority of real estate contracts are signed electronically by buyers and sellers, which is where most issues typically arise. The most common errors involve trusts, corporations, limited liability companies (“LLC’s”), and powers of attorney. Some of these common mistakes are: 1) listing a party as an individual when, in fact, a trust or entity owns the property; 2) a party signs the contract in their own name, rather than as the duly authorized representative of the trust or entity; 3) a party signs the initials of the LLC or signs the LLC name itself rather than the individual signing; and 4) a party signs the contract as John Smith, POA, rather than listing the principal’s name followed by Power of Attorney language.

Listed below are the correct formatting for a seller and/or buyer name on a real estate contract, and the correct signature to match it:

For a trust, you must confirm who is the currently acting Trustee of the Trust:
• Seller or Buyer name: John Smith, as Trustee of The John Smith Living Trust dated June 12, 1990
• Signature (if Seller): John Smith, Individually and as Trustee
• Signature (if Buyer): John Smith, as Trustee

For a corporation, the CEO, President, or any Vice President have apparent authority to sign on behalf of a corporation, unless a Resolution has been previously recorded in the Public Records authorizing some other officer to sign documents:
• Seller or Buyer name: Beach Life Corporation/Corp./Inc., a Florida corporation
• Signature (Buyer or Seller): John Smith, as President (or VP, or CEO, unless a Resolution is recorded and attached)

For a LLC, either a Manager or Authorized Member will be signing on behalf of the LLC (depending on whether the LLC is manager managed or member managed):
• Seller or Buyer name: Beach Life LLC, a Florida limited liability company
• Signature (Buyer or Seller), if Member Managed: John Smith, as Authorized Member
• Signature (Buyer or Seller), if Manager Managed: John Smith, as Manager

If a Power of Attorney is being utilized, it is important to confirm that the Power of Attorney is specific and usable for a real estate transaction in Florida. Be mindful that if a lender is involved many lenders require prior approval and transaction specific Powers of Attorney (which list the loan number, lender, property address, legal description, specific loan documents to be executed, type of loan, etc.)
• Seller or Buyer name: John Smith (always use the name that is on the prior vesting deed)
• Signature (Buyer or Seller): John Smith, by Jane Smith, as his attorney-in-fact

As always, if you have any further questions on how your clients should properly execute a contract, we encourage you to contact your local real estate attorney, or one of the attorneys at Berlin Patten Ebling.

Sincerely,

Marllory Moretti, Esq., mmoretti@berlinpatten.com
Berlin Patten Ebling, 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.

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