A Power of Attorney (POA) is a legal document that allows one person, known as the “Principal,” to delegate authority to another person, the “Agent” or “attorney-in-fact.” It’s important to note that being an “attorney-in-fact” does not necessarily mean the person is a lawyer; in fact, this role is typically filled by someone who is not an attorney.
In Florida, for a Power of Attorney to be valid in executing a deed, it must adhere to the same formalities required for a deed’s execution. In the context of a real estate transaction, a Power of Attorney might be used to allow another person to sign a contract, a deed, handle financial transactions (including signing a promissory note and a mortgage), or sign other closing documents for the Principal. When executing documents under a Power of Attorney, the Agent will always include after his or her signature that the document is being signed “as agent for” or “attorney-in-fact for” the Principal. If the Agent signs only his or her own name, the Agent may be held personally liable for whatever was signed. Though somewhat tedious, it is always recommended to sign as follows: “John Q. Smith, as attorney-in-fact for Jane Q. Doe,” or “John Q. Smith, by Jane Q. Doe, his attorney-in-fact.”
Considerations and Risks in Using a Power of Attorney
While a Power of Attorney can be a useful tool in real estate transactions, it should be used cautiously. If the Principal is available, it’s generally advisable for them to be present to avoid complications such as fraud, forgery, incapacity, undue influence, or family disputes. Powers of Attorney are particularly vulnerable to abuse, and the misuse of this authority can lead to significant legal and financial issues. Moreover, extreme caution should be used to avoid possible conflicts of interest, such as when a real estate agent or real estate attorney is requested to serve as an Agent of a Principal under a Power of Attorney, particularly where they are the Listing Agent and Closing Agent, respectively. Questions of undue influence are more likely to arise in such situations.
For this reason, Powers of Attorney are not always accepted for use, notwithstanding that it was lawfully executed and has not been revoked, suspended or terminated. Financial institutions, such as mortgage lenders, and title insurance underwriters often have specific requirements for accepting a Power of Attorney. They may require their own forms or a Specific Power of Attorney that details the specific powers related to the real property, including legal descriptions. It is crucial to obtain consent from both the lender and the title underwriter before using a POA in a transaction. Additionally, the Agent may need to provide an affidavit confirming the POA is still valid and has not been revoked.
Legal Implications and Best Practices
Consideration should also be given to the time and expense involved in having a Power of Attorney drawn, executed, accepted for use, and the original recorded in the Public Records. In addition, the Agent will be required to sign an affidavit certifying that the Power of Attorney is still valid and in effect (among other specifics too lengthy to be repeated here). A common misconception is that a Power of Attorney survives the death of the Principal. A Power of Attorney is invalid once the Principal dies.
A Power of Attorney is a powerful legal document that gives the authority for someone to act in someone else’s legal capacity. A Power of Attorney may give another person the right to do almost any legal act that the maker of the Power of Attorney could do if personally present. It should be carefully considered and prepared by a lawyer to meet the Principal’s specific circumstances. Pre-printed forms may fail to provide the protection desired, and are strongly discouraged. As always, should you have any questions regarding the foregoing we urge you to consult with your local real estate attorney.
Article Authored by Mark C. Hanewich, mhanewich@berlinpatten.com
