New Year, New You, Same Power of Attorney

As the New Year is quickly approaching, we are all making resolutions for ways to improve both personally and professionally. While most resolutions revolve around eating healthier or exercising more, one resolution should be at the top of your list: the desire to learn more about Powers of Attorney and the impact that they have on a real estate transaction! While each type of Power of Attorney could be discussed in great detail, the focus of this blog will discuss the three (3) common mistakes that closing agents see when a Power of Attorney is used in a real estate transaction. 

What is a Power of Attorney?  

A Power of Attorney allows a person to act on the behalf of another in specified situations. While there are various types of Powers of Attorney, the most common types we encounter in a real estate transaction are Limited, General, and Durable Power of Attorney.  

Three (3) Common Mistakes to Avoid When Using a Power of Attorney 

Utilizing a Power of Attorney in a real estate transaction is not always easy and there are three (3) common mistakes that the parties, as well as real estate agents, make when a Power of Attorney is involved.  

  1. The first mistake is that the use of the Power of Attorney is not disclosed early enough in the transaction to the closing agent. It is critical that the closing agent be alerted to the fact that a Power of Attorney is to be used as early in the transaction as possible because the closing agent will need to review the Power of Attorney to ensure that it grants the requisite powers from the principal to the agent as well as obtain the title insurance underwriter’s and lender’s (if applicable) approval.  
  2. The second mistake is that a party assumes that because the Power of Attorney was executed in accordance with the laws of the state of where it was executed, that the Power of Attorney can be used in the subject real estate transaction. In Florida, if a Power of Attorney is being used on behalf of a Seller and the property is homestead property, the Power of Attorney must be executed with the same formalities as a Florida deed (executed in front of a notary and two disinterested witnesses). Even if these requirements are satisfied, the title insurance underwriter will still need to approve its form, substance, and use.  
  3. The third mistake a party makes when trying to use a Power of Attorney is the assumption that only a copy of the Power of Attorney is needed for closing. In order for a Power of Attorney to be used in a real estate transaction, the original document must be recorded in the Official Records, which requires that the closing agent be in possession of the original to submit for recording. If the original Power of Attorney is unable to be found, then a copy of the Power of Attorney typically cannot be used, which can pose many issues for the transaction, especially if the principal no longer has the legal capacity to execute legal documents.  

Thus, to avoid any closing delays, it is critical that the use or potential use of a Power of Attorney be disclosed to the closing agent early in the transaction to ensure that it can be utilized.  

If you have any questions or concerns regarding the utilization of a Power of Attorney in a real estate transaction, please reach out to your trusted real estate attorney. 


Cameron Allen, Esq.  

Cameron focuses his practice on residential and commercial real property transactions. 

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