There are circumstances when residential real property transactions include the use of a Power of Attorney (or “POA”). In Florida, as in many States, an individual, corporation, or trust may authorize a third party to act in their place to convey (sell), buy, or mortgage residential real property without having to be present or even informed of the transactions. A POA may also be used to enter into a contract to buy, sell, or mortgage real property

Use of a Power of Attorney adds additional complexity and is often the source of fraud, theft, misrepresentation, and breach of fiduciary duty. POAs are also frequently misused unintentionally due to the principle’s or agent’s lack of familiarity with how they work. All parties concerned in the transaction should take extra care to avoid a fraudulent or ineffective transaction and the resulting potential liability. Consumers and real estate professionals alike should take precautions that will significantly reduce or eliminate these risks.

There is a common misbelief that third parties such as banks, government agencies, hospitals, or title agencies must accept POAs. Third parties are not required to accept every POA and may refuse to take them for a variety of reasons, including their policies. Many, like banks, do not accept a POA if it is more than six to twelve months old. Others like, medical facilities and government agencies, may require the use of a specific POA form provided by their legal counsel. Others refuse to accept POAs executed outside the State of Florida. Therefore, it is advisable to contact all parties involved in a transaction to determine the proper form.

First, one needs to be familiar with what a POA is, the different types of POAs, their requirements, and their uses and limitations. All of these can vary from state to state and country to country. This article is limited to POAs authorized explicitly for use in Florida.

 

A power of attorney is a legal document through which one party grants certain powers to another party to represent or act on their behalf. The party with the granted authority become an attorney-in-fact. The grantor and attorney-in-fact are referred to as the principal and agent, respectively.

 

Just because a document is a valid POA doesn't mean that it is effective in particular real property transactions. Therefore, it’s essential to know the types of POAs and their requirements under the law.

Types of Powers of attorney: 

  • General Power of Attorney – A POA that grants a broad range of powers. Each power granted must be specified like the power to buy or sell a motor vehicle, to access bank accounts and sign checks, or buy, sell, or mortgage real property. Specific powers aren't automatically included, nor are they required to be excluded explicitly although they often are.

 

  • Special or Limited Power of Attorney – This type of POA limits the agent to a single transaction or certain types of transactions for a limited period. The limitations prevent misuse outside of the principal’s intent. In the past, this type of POA was often used to affect the purchase or sale of a specific residential property when the principal is unavailable. However, they are used less frequently and are being replaced by mail away closings, electronic notaries, and soon by blockchain transactions. 

 

  • Durable Power of Attorney – A durable POA may be either general or limited in purpose. The difference is that it isn’t invalidated by the principal becoming incapacitated. The POA must contain specific wording that makes it clear that it survives the incapacity of the principal. Even then, there are some circumstances where the POA is ineffective due to the principal's incapacity. 

 

  • Springing Power of Attorney – A springing POA may be general or limited in purpose, but it doesn’t become effective until after the principal is determined to be incapacitated. This form of POA was prevalent in estate planning in the past. It helped avoid misuse because it's invalid until the principal is determined to be incapacitated and thus unable to conduct his or her affairs. However, springing powers of attorney are no longer valid in Florida unless they were executed before October 1, 2011, making them very rare. The production of a springing POA by a party to a real estate transaction should be met with extra caution.

 

  • Incapacity is defined under Florida law to be: “The inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, or benefits and income.”

     Under Florida law, an agent is a fiduciary of the principal. For the agent to qualify as an attorney-in-fact in Florida, they must be at least 18 years old or a financial institution with “trust powers” and an office in Florida. Agents must keep records. Under Florida law agents under a POA must keep separate records of all receipts, contracts, disbursement, and transactions made on behalf of the principle.


     Florida requires the POA to be signed by the principal and two witnesses to the principal’s signing, and a notary must acknowledge the principal’s signing. Since the notary is not acknowledging the witnesses’ signatures, the notary may act as both witness and notary. Also, if the principal present but physically unable to sign, then he or she can make their “mark,” or the notary may sign their name for them.

     When executing documents, agents do not sign their name. The agent must sign the principal’s name first. This shows that the agent isn’t acting on their own behalf. The agent then writes “by” and signs their own name followed by the words “agent,” “attorney-in-fact,” “power of attorney,” or simply “POA.” Before signing at a real estate closing the agent should always ask the closing or escrow agent which wording to use. A correct signature should read "Jane Principal by John Agent, POA."

     Additional facts about POAs: 

  • Florida law does not require the presentation of the original POA. Electronic copies, photocopies, and facsimiles are legally acceptable, but not preferred.

 

  • POAs do not expire unless there is an expiration date in the document.

 

  • Valid, out of State POAs are acceptable but do not have to be accepted.

 

  • Multiple agents named in a POA may act independently unless otherwise restricted by language in the document.

 

  • Compensation: Certain qualified agents such as attorneys at law, the principal’s spouse or heirs, and financial institutions with trust powers, among others, may receive compensation for their services. Non-qualified agents may only receive reimbursement for expenses.

     Real estate professionals may not provide advice as to the POA's validity or affect, but should advise their customers or clients to have the POA reviewed by a licensed Florida attorney familiar with both real estate transactions and POAs. Always make such recommendations in writing and retain a copy in the transaction record.

     While used less frequently today in residential real estate transactions, powers of attorney still have their place under certain circumstances. POAs are often improperly drafted, misunderstood, or intentionally used for fraudulent purposes. Consumers and real estate professionals need to take extra precautions when using a POA for contracting or closing the sale, purchase, or financing of real estate sale. The best practice is to request a complete copy of the power of attorney early in the transaction or before entering into a contract and present it to and experienced Florida attorney for review. If a contract is executed before an attorney review, then the contract should be subject to attorney approval. Failure you do so could result in a fraudulent or ineffective transaction. Furthermore, it could create a cause of action for negligence or malpractice against a Florida real estate licensee or licensed title agent and may place their license in jeopardy.