Power of Attorney Use

A Power of Attorney (POA) is a legal agreement which allows one person (the ‘agent’) to sign documents on behalf of another person (the ‘principal’). POA’s are a great option in some circumstances but should be used because one party simply does not want to come to closing.  Closing attorneys need to balance accommodating the parties with protecting against fraud.

Using a power of attorney creates additional risk in the transaction because one person is being given legal rights to sign documents for another. If there is no reason for the additional risk, a POA should not be used.  A POA should not be used merely for convenience.

There are times when an owner, buyer, or seller, will not be available at a real estate closing.  For example, a person may be out of the country or physically unable to sign for themselves.  Using a POA is usually much easier than trying to get closing documents signed in another country.

Most of the time, a specific Power of Attorney is used to indicate that the principal approved the terms of the transaction. This lowers the risk as much as possible by keeping such powers very limited.

Each lender will have very specific requirements to approve a POA. Some loan programs will not allow them at all. If a POA is being used in a transaction involving a loan, it is best to check with the lender for approval.

Another general rule for POAs is that the agent may not convey the property to themselves. This is self-serving, increases risk in the transaction, and creates a title issue.

A general Power of Attorney may be approved on a case-by-case basis, but is avoided whenever possible. Georgia does have a statutory form that is accepted in most situations. Any attorney or lender accepting the POA will likely confirm with the principal.

It may appear easier to use a POA in some cases, but using a POA out of convenience increases costs, creates unnecessary risk, and the person signing may not be happy with you once they see they have to write out “your name, by agent’s name, as attorney in fact” on each signature line.

John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc..
Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse
mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title
searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road.
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