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Real Estate Transactions And Powers Of Attorney

Real Estate Transactions and Powers of Attorney

I do not know why, but we have seen, and experienced, an unusual uptick in the use of Powers of Attorney by people buying and selling real estate. I do not know if it is a coincidental increase in the frequency and will pass as an anomaly, or whether the public is expecting that real estate transactions will be held remotely, through a Power of Attorney, as opposed to the “old model” of everyone showing up at the settlement table. Powers of Attorney are, of course, appropriate when either the Seller (most likely) or the Buyer (less likely) are incapable of attending closing by reason of living out of state/out of the country, traveling or incapacitated by a medical condition. Unfortunately, we are seeing more and more instances of Powers of Attorney being used by people who just plain do not want to be bothered with attending closing. This creates a problem.

For Buyers, most lenders are not excited about a borrower signing loan documents through their Power of Attorney. Even if the Buyer is paying cash, most title insurance companies are uncomfortable with someone other than the Buyer signing all the documents necessary to purchase real estate. The same applies for a Seller using Power of Attorney to sell real estate…the title insurance company is uncomfortable if the actual owner is not present at closing.

In addition, we are seeing more and more Power of Attorney forms that people are pulling off the Internet that just are not compliant with Pennsylvania law and not acceptable for recording by the County Recorder of Deeds Offices. In addition, title insurance companies are uncomfortable relying upon Power of Attorney as it cannot be determined whether that Power of Attorney is still in effect…was it rescinded by the principal last night? Last week? A year ago? How could the title insurance company ever allow this? Why is the principal not appearing at closing? Is he/she incapacitated with a medical condition? Is he/she living in another state/county? On the other hand, is he/she just not willing attending closing? Is the agent named in the Power of Attorney a “bad guy” operating under a rescinded Power of Attorney in an effort to defraud the principal? Title insurance companies struggle with all of these questions and, as a result, are reluctant to rely upon a Power of Attorney in a real estate transaction.

A good title insurance company will anticipate all of the above and work closely with the parties to either make sure that the Power of Attorney is valid according to Pennsylvania law and the use of same is appropriate for this transaction, or, in the alternative, will work to avoid the necessity of the Power of Attorney by accommodating the principal…signing the documents before closing, overnighting all of the documents to the principal so that he/she can sign everything in front of a local Notary, etc.

Contact OWM Law offices regarding these real estate issues, and the use of Powers of Attorney, to assure a smooth real estate transaction.

— Written by David A. Megay, Esquire

DISCLAIMER: The contents of this blog are not legal advice, and are not to be used for that purpose. If you are faced with a legal matter, you should contact a lawyer immediately in order to ensure that you are protected.

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