A Power of Attorney For Real Estate Generally Authorizes an Agent to Sign and Deliver Deeds
A power of attorney form is a type of legal form that is commonly used for conducting basic personal and business transactions, including matters that relate to banking, loans and real estate transactions. In particular, a power of attorney authorizes a specifically designated third party (known as the “agent”) to engage in certain tasks (e.g. banking transactions) on behalf of the person granting the power (the “principal”).
Power of attorney forms are frequently signed in connection with transactions involving real estate. When someone executes a power of attorney which conveys confers upon an agent the general authority with respect to “real estate transactions,” the power of attorney form will generally be viewed as authorizing the agent to execute and deliver deeds, leases, mortgages, and other legal documents relating to the purchase, sale, transfer, encumbrance or leasing of real property.
In many jurisdictions, an itemization of powers that are deemed to have been granted by virtue of a power of attorney is set forth in statute. For example, in New York, the scope and limitations applicable to various forms of powers of attorney are set forth in the NY General Obligations Law. Within that law, there is a particular subsection which explicitly sets forth the powers of an agent to execute legal documents relating to real estate. Pursuant to Section 1-1502A, a power of attorney for real estate is generally interpreted to include the authority “[t]o execute, to acknowledge, to seal and to deliver any deed, mortgage, lease, notice, check or other instrument which the agent may think useful for the accomplishment of any of the purposes enumerated in this section.”
Before signing a power of attorney form, it is important for that the principal carefully consider the scope (extent) of the powers that he or she is granting to the proposed agent, and to be sure that the any limitations on the agent’s powers are specifically and clearly set forth in the power of attorney form. It is also essential that the principal be familiar with his or her agent. Court cases involving agents who have allegedly abused the powers that were granted to them in power of attorney forms are not infrequent.
By way of example, the Court of Appeals for the State of Kentucky recently considered a case in which family members of a deceased woman accused her bank of improperly honoring a power of attorney form in which the decedent had conveyed broad banking powers to a third party. Apparently, the agent abused his or her authority and misappropriated funds. The Kentucky Court ruled in favor of the bank, concluding that the bank had neither the duty nor the ability to investigate the circumstances pursuant to which its deceased account holder had granted a power of attorney to the third party.
In summary, with regard to powers of attorney, three key considerations include: (a) if you wish to enter into a power of attorney, be sure to use a state-specific form that has the legal language needed to ensure that it is valid and enforceable; (b) carefully evaluate the trustworthiness of the potential principal(s) to whom you are granting powers; and (c) carefully review the language in the power of attorney form to ensure that the powers conveyed are narrowly drafted so as to serve your needs, without opening the door to uses that are unintended and/or unanticipated.
Templates and sample power of attorney forms are generally available for download online. Such power of attorney samples should be used for guidance, and will likely need to be edited to suit your individual requirements and concerns.