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Power of Attorney in Real Estate Transactions

There are often times when a buyer or seller does not want to be present at a real estate closing – or is unable to attend.  A Power of Attorney (“POA”) appointing another person to sign on behalf of the buyer or seller can be used. However, a poorly drafted POA – or one appointing an improper party – will defeat the goal of using the POA and may postpone the closing or unravel the transaction entirely.

The most common problem is the attempted use of a defective form of POA.  Many people get their form POA from office supply stores, an internet search, or use a form from another state.  If the form does not meet Florida’s statutory requirements, it may not be used at closing.  Under Florida law, the POA must include the signatures of two witnesses and a notary.  In addition, many lenders will not permit use of a POA – or if they do allow it, they require that the POA be specific to the transaction even requiring that the property, lender name, and loan number be identified. Further, most title insurance underwriters go beyond the statutory requirements with even stricter guidelines for use of a POA.  The underwriter will require an original POA be recorded along with the deed or mortgage that has been executed. A copy will not be acceptable.

Another problem can involve the person who has been asked to act as a POA. Under 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 because the trustee or officers cannot delegate their fiduciary duties under a POA. Do not assume that simply because a POA appears to have been properly executed that it can actually be used.

If you are contemplating using a POA in a real estate transaction, it is critical that the original POA be reviewed in advance of the closing to make sure that it is acceptable. An alternative to the use of the POA is to structure the closing as a “mailaway”. A “mailaway” closing is conducted by delivering the documents that need to be signed to the parties – wherever they are – electronically or by courier. The party signs the documents at his or her location before the necessary witnesses and notary and delivers the executed original documents to the closing agent or attorney.

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