Utilizing a Power of Attorney in Real Estate Transactions in Ohio
A Power of Attorney is a legal document allowing one person – the Principal – to delegate authority to another person – an Agent, or “attorney-in-fact” – to act on their behalf.
In Ohio, a Power of Attorney can only be used to execute a deed if it follows the same formalities as those legal instruments. This means that a Power of Attorney may allow an Agent to sign a deed or contract, handle financial documents including promissory notes or mortgages, and sign the Principal’s closing documents. Agents executing documents under a Power of Attorney must indicate that the document is being signed as an agent or attorney-in-fact for the Principal after their signature.
It is not necessary to utilize a Power of Attorney if the Principal is available. This is because the Principal’s mere absence may raise questions about the possibility of fraud, forgery, undue influence, family infighting, or something of that nature. Since Powers of Attorney are easy to abuse in ways that are hard to spot, one should exercise extreme caution as to avoid potential conflicts of interest, such a real estate agent or attorney being given the role of Agents, especially when they are the respective Listing Agent and Closing Agent. Such occurrences may lead to questions of undue influence.
This means that Powers of Attorney are not always accepted unless they were lawfully executed and have not been revoked or in any way terminated. Financial institutions like mortgage lenders may set their own policies for accepting Powers of Attorney, including the use of their own forms. This may also be the case with certain title insurance underwriters who are asked to insure real estate titles where deeds and mortgages are executed under a Power of Attorney. Before a Power of Attorney is utilized, consent from a lender or title underwriter should be obtained. Most lenders and title underwriters require a Specific Power of Attorney, which contains a legal description of the subject real property. This will include the following general powers: “to protect, conserve, bargain, lease, grant, et cetera, and to convey and execute any closing statements, mortgages, deeds, and other documents to effectuate sale of conveyance and / or mortgage of the following described legal property,” before providing the legal description.
When having a Power of Attorney drawn and executed, consideration must also be given to the time and expense in having it accepted for use. One must also consider the expense of having the original recorded in the Public Records. Despite the common misconception, Agents must also sign an affidavit certifying that Powers of Attorney are still in effect, as they become invalid if the Principal dies.
A Power of Attorney grants the authority for someone to act legally in another person’s capacity had its maker been present personally. In order to meet the Principal’s circumstances, a Power of Attorney should be considered carefully and prepared by a lawyer. Since pre-printed forms may not provide the necessary protection, their use is discouraged. If you have any further questions, be sure to consult with your local real estate attorney.