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Using A Power Of Attorney In A Real Estate Closing

A Power of Attorney (POA) is a legal document executed by a Principal (buyer or seller) that designates an agent, referred to in this document as the Attorney in fact, to sign on their behalf. In the State of Maryland, it is suggested that you use a statutory POA form when such a power is needed. Mehalko & Moghul can prepare a suitable POA to be used in Virginia and The District of Columbia.

What Should a Power of Attorney Include?

The POA should be specific to the property involved. It must set out all names of the parties to the POA, it should state the address of the property and the legal description, if available. Different powers are given to the attorney in fact, specific to the transaction participant, buyer or seller. If the POA is to be used by the buyer, there should be specific language in the POA that authorizes the attorney in fact to sign all buyer specific documents provided to them by the closing agent. This would include notes, deeds of trust, settlement statements, contact addendum, recording forms and all lender provided documents. If the POA is to be used by a seller the POA must allow the attorney in fact to sign a deed and all other seller specific settlement documents presented by the closing agent. The document should clearly define the specific powers given to the attorney in fact. The language used can become an issue at the closing, especially if a general POA is used that gives the Principal broad powers.

When do you use a Power of Attorney?

This is a decision that should be carefully thought out, and after alternative methods are explored. Ask the closing agent about sending documents by overnight delivery directly to the Principal. This way they can sign their own documents and return them by overnight delivery back to the closing agent. This results in an acceptable delay to the closing, usually one day. Often the closing agent can send documents alternatively by email if preferred. Once printed and signed, the originals are then returned to the closing agent by overnight delivery. If neither of these options is viable, one should consider a POA. All parties that are contemplating the use of a POA should be in contact with your closing agent as soon as you realize one is needed. Most settlement offices can provide the forms and advice needed to have this done so the closing can be completed without delay. Mehalko & Moghul can prepare these documents for you since we have experience in this area.

How should it be executed?

It's important to have the Principal read the form completely and consult an attorney if there are any questions. By giving someone the power to sign on their behalf, the Principal is giving the attorney-in-fact power to make decisions for them. When signing a POA, the Principal's signature must be notarized at the time and place it is signed. A local notary in any state of the U.S. is acceptable. If signed in a foreign country, the signature must be notarized by a United States Officer. This means a visit to the US embassy or a consulate. If the Principal is in the military, the POA can be notarized by a military officer. If a foreign, local notary is used, you must have the local notary certified by a judge of the highest court in the jurisdiction where the notary is located. This may require local assistance. The Principal's signature on the POA should be witnessed by two individuals.

Finally,....

At closing, the original must be presented to the closing agent, a copy is unacceptable. It will be recorded in the land records along with the deed or the deed of trust, depending on how it was used. This means the Principal will be without the original for several months. It will not be available to the Principal for the period needed for the county to record it and then return it to the closing agent. Be sure the Principle understands this.

The POA should be signed recently; most title insurance companies do not want to insure an older POA. Ideally it should be signed within the last year. It also must be durable, meaning it should have language stating that the power will not terminate in the event the principal is disabled. A termination date is good to limit the use of the document. If in the event the POA you need to use involves any of these issues, it can be reviewed by the closing attorney or the attorney working for the title insurance company. Once again, Mehalko & Moghul can review this document on your behalf.

Make the effort to have original signatures on all closing documents. When a Power of Attorney is needed, be in touch with the closing agent early in the process.

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