Your buyer will be out of the country when closing occurs; your buyer is in a nursing home and getting signatures is difficult; your buyer is now mentally incapacitated and therefore cannot sign closing documents; what do you do? The standard response is get a durable Power of Attorney (POA), or in the last scenario, hope you already have one.
These circumstances, and many others, come up frequently in real estate transactions. Unfortunately, as is often the case in real estate, the solution is not as simple as most people think it is. Powers of Attorney executed in Florida must be very specific, the original (or certified copy) must be provided for recording, and the Florida POA must be witnessed by two parties and must be notarized. Fla. Stat. § 709.2015(2).
Often we are asked to use a POA that was prepared and executed out of state, which POA fails to meet the Florida requirements, as outlined above. If the property is homestead property and the POA is insufficient, your transaction may be in trouble unless you can get a new POA signed with the deficiencies corrected. However, if the principal is now incapacitated and incapable of signing a new POA, then your transaction could be over, as it is likely that a legal guardianship over the principal will be needed, causing significant delays (and added costs to the seller).
Nevertheless, if the property is not a homestead, there may be a work-around if an out of state attorney is willing to provide an opinion letter as to the efficacy of the POA in the state it was executed, stating that the POA is effective to convey title in the foreign state. Usually, the attorney who prepared the POA will provide this letter, which is then recorded with the POA and the deed. For example, New York POAs do not require witnesses, only a notary. Florida law allows for the use of the NY POA if the property is not homestead property and the POA complied with NY law at the time of its execution. Again, this would be evidenced by an opinion letter from a NY attorney.
In many cases, the client asks the Realtor, Closing Attorney or Title Company to be the attorney-in-fact (“AIF”) under the POA; however, Florida law prohibits a person with a financial interest in the transaction from performing as the AIF. And from a practical standpoint, why would you ever willingly take on this added level of liability? Furthermore, in financed transactions, lenders often have very strict rules on who can perform these duties, and typically will only allow relatives of the borrower to be the AIF. There will also be other specific requirements, for example, the physical address of the property typically must be included in the POA. This can be problematic if the existing POA only gives a general authority over “all land of the principal.”
If an acceptable POA exists and the client is now incapacitated, the transaction may still proceed as long as the existing POA is durable, the client is still alive, and the authority has not been suspended or challenged through judicial proceedings and no action for a guardianship has been filed. The AIF will need to sign an affidavit at closing attesting to these facts.
Finally, from a practical standpoint, when a POA will be relied upon by an AIF to sign a lengthy mortgage loan package for the principal, let the AIF know that the signing process will be about twice as long as normal, as there is a specific and lengthy signing procedure that must be followed very closely for each document signed and/or initialed by the AIF.
There is often a fee for preparation of the POA, as there should be, along with recording costs that the client should be aware of before the POA is prepared. Whenever the issue of a POA arises in real estate transactions, be sure to contact a Florida licensed real estate attorney to discuss the issues presented here, along with any others that may come up specific to the transaction.