Residential Realities October 2013
October 15, 2013--I've Got the Power: Why more than one original power of attorney may be needed...
In many closings, one or more of the parties may not be available to attend the big day. When that happens, the unavailable party has another person, usually his or her attorney, attend the closing as the absent party's “attorney-in-fact” (also called that person's "agent"). Spoiler Alert: Closings are usually two-hour paper pushing sessions and many clients just don't want the bother of attending.
When an Attorney in Fact is a Necessity
In some cases, however, a party may be disabled. In that situation, the disabled party will designate someone to act on his or her behalf, for a number of purposes, not just for a closing. When a disabled party needs to sell or buy a property, he or she may also need the agent to handle other matters before or after the closing. As a result, it may be worthwhile to have at least one additional power executed. In real property transactions (as opposed to co-op purchases and sales), the original power must be submitted with the recording of the deed. Although the original power will be returned to the party 's attorney after closing, there is always the possibility that the power will be lost by the recording office. If there is only one power, and that power is lost, it can create great difficulty, if the disabled person is no longer competent or physically able to execute a new power. If the execution of a new power is not possible, a costly and time-consuming guardianship proceeding might be required in order for someone to be authorized to act for the disabled party. Although original powers are not recorded in co-op transactions, the managing agent or the purchaser’s lender (if the purchaser is attending by power) may require an original power. Managing agents and lender’s counsel are often unwilling to return the original power (although special circumstances may allow for the original to be returned to the agent).
Residential Reality: Think Ahead When a Power of Attorney is not Optional
In most cases, one power is sufficient to conclude a real estate transaction. In those special cases, when a party's agent will have additional duties after a closing, having an additional power executed may be a very good idea.