Power of Attorney Basics

POA with Extensive General Powers

Presented by Kay M. Creasman, VP & Virginia State Counsel

When I was in private practice doing wills and related documents, I’d always explain a Power of Attorney (POA) with extensive general powers as being similar to giving someone a loaded gun with regard to your finances. You have to really trust the person to whom the power is given. Over the years, the rules have tightened as to what powers need to be specifically granted by the principal. They have tightened due to abuse of power by agents, often resulting in the agent having full record title to the property.

Such use is not always nefarious, however. Sometimes it’s done with positive intent, such as having a disabled spouse who lenders can’t accept as a borrower, so tenancy by the entirety needs to be severed and the real estate conveyed to the spouse with good credit. This allows the family to have the funds they need to care for the spouse with disability.

The items that need to be specifically approved are outlined in Va. Code §64.2-1622:

1. Create, amend, revoke, or terminate an inter vivos trust;
2. Make a gift;
3. Create or change rights of survivorship;
4. Create or change a beneficiary designation;
5. Delegate authority granted under the power of attorney;
6. Waive the principal's right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan;
7. Exercise fiduciary powers that the principal has authority to delegate; or
8. Have authority over the content of an electronic communication of the principal as provided by § 64.2-123.

In addition, Section 64.2-1625 (B) requires specific authority to change a transfer on death deed:

B.  An agent under a power of attorney acting under the authority of this section shall not have the authority to create, change, or revoke a transfer on death deed on behalf of the owner of property unless such agent is granted the power to create or change a beneficiary designation as required by subdivision A 4 of § 64.2-1622. This subsection shall not be construed to prohibit such agent from exercising any authority under subsection A, even if the effect of exercising such authority may be to revoke a transfer on death deed.

We require that powers of attorney be reviewed by ORT underwriters prior to being used in a transaction insured by Old Republic. We get multiple questions every week about powers of attorney and whether they are being or have been property used in the chain of title.

Here is an example timeline from a real case sent to us for review: 

1996: W buys real estate.

2004: W and H marry.

2008: Title is changed to t/e.

2014: Powers of Attorney are signed with each other as agents.        

2016: H used POA to convey from himself and wife to just himself, and puts on a $105,000 deed of trust. 

2017: W is diagnosed with severe, permanent dementia.

2017: Daughter is appointed by the court as conservator of assets and guardian of the person of W.

2018: Daughter, as conservator, sues H (step-father) for abusing his power under the POA, claiming the deed of trust is invalid and asking for title to be vested in her mother, H's wife.

2018: Daughter files a Lis Pendens. Litigation continues.

2021-2025: Judgments against H total about $17,000 plus interest and fees.

2024: Daughter, as conservator, files for divorce from H, on behalf of her mentally disabled mother (H's wife).

2024: Parties, as part of divorce and to wrap up the 2018 litigation, reach a property settlement agreement which the judge in the 2018 litigation incorporates into that case. The judge authorizes the conservator to sign on behalf of the mother/wife. The order is silent as to H’s interest.

What do we require for title insurance purposes?

1. Lis Pendens must be released of record.
2. Deed of trust must be paid and released.
3. Judgments must be released of record. Normally this will require payment. If there are not sufficient funds to pay the debts a court order may be needed to have the judgments attach to the proceeds that are paid to the court in exchange for a judicial release.
4. Various court orders were in different jurisdictions. They must either be independently recorded where the land is located, or a copy must be attached to the deed when recorded. Some clerks don’t allow this second option.

How do these requirement relate to the Power of Attorney topic? If the title agent was underwriting for Old Republic Title and had been provided a copy of the POA for review in 2016 (when the deed from the couple to H alone using POA was recorded), the agent would have seen the deed was self-serving and would perhaps have prevented the deed and deed of trust from being recorded. Double-checking POA is always a sensible thing to do.

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