Power of Attorney Basics (AYU March 2023)

Question: Don’t we need a specific Power of Attorney (POA) for a current party to a real estate transaction?

Answer (from Underwriter Kay Creasman): A POA is a wonderful but dangerous document. It’s the equivalent to handing someone a loaded automatic. You have to TRUST that person with your (economic) life. Choose your Agent wisely because if they exceed their authority, unless the third party should have been aware of the excess, the law supports the third party. Va. Code § 64.2-1617(B).

A POA is normally generated when someone is doing estate planning or writing their will. The client is advised to review the information at least every 5 years or every time there’s a life-changing event (new child, death, divorce, children becoming adults). Seldom do clients heed the attorney’s advice.

Many Agents remember "the old days,” when a specific POA was required for each real estate transaction. Matters have evolved since then. If it’s possible to get a fresh, specific POA, that’s fine but not generally necessary. An old POA can work, as long as it has the necessary elements:

1. Principal grants powers to an Agent (aka Attorney-in-Fact).
2. Power of sale and conveyance (sale is signing the contract, while conveyance is signing the deed).
3. If a gift is involved, the language has to be closely examined, especially if the recipient is the person acting as Agent.
4. Is self-dealing allowed or prohibited, or is the document silent?
5. Conditions may be included in the POA, similar to a safety feature on a gun. Typically this is called a “springing” POA. For example, two physicians must sign letters saying the Principal lacks mental capacity to handle or understand their own business affairs.
6. Either the real estate must be identified with specificity, or the POA has to be broad enough to cover any real estate owned by the Principal.
7. Signature must be notarized.
8. Original must be located to be recorded.

A POA Agent Certification form must also be recorded. The equivalent of an old “alive and well” affidavit, this form states the Agent is unaware of the POA having been terminated or replaced by a newer document, and to the best of the Agent’s knowledge, the Principal is alive and doing fine.

Although non-attorney title and settlement agents may provide a form that would be acceptable for use in a transaction, they may not complete the form for the consumer. That may be considered the Unauthorized Practice of Law.

Contact us for additional information.