Hot Topics in Claims Avoidance: Avoiding POA Claims in Florida
In the title industry, a power of attorney (“POA”) is used when one of the parties to the transaction cannot be physically present at the closing. Transactions involving a power of attorney are ripe for fraud and errors.The following checklist can be used to determine whether or not to proceed with insuring a real property transaction involving a POA:
- The POA must be signed by the principal.
- The name and signature of the principal should match other documents in the public records.
- The POA should be free from alterations or obvious corrections (no white-outs or strike-throughs; all provisions have the same font and size; no missing pages or paragraphs).
- If the POA is transaction specific, it should identify the real property by legal description or address, and enumerate specific powers for the insured transaction (e.g., sell, convey, mortgage, encumber, lease, execute deeds and bills of sale, etc.). Note, however, that a general durable POA does NOT need to describe the real property, as long as it contains the requisite powers.
- The POA must have two subscribing witnesses.
- The POA must contain a proper notary acknowledgment (i.e., venue, date, name of principal, personally known or ID provided, notary signature and seal affixed).
- The agent must not be a party to (or benefitted by) the proposed insured transaction.
- The agent should be in possession of an original POA, capable of being recorded (pursuant to §695.01 and §695.03, Florida Statutes, the original POA must be recorded in the public records of the county where the subject property is located). If the original is not available contact underwriting.
- Pursuant to §709.2106(3), Florida Statutes, a POA to convey or mortgage real property executed in another state, which does not comply with the execution requirements set forth for POAs executed in Florida, will be valid in Florida if, when it was executed, the POA and its execution complied with the laws of the state where it was executed. Agents must satisfy the requirements set forth in Florida’s Uniform Power of Attorney Act, when dealing with out-of-state POAs, and must be sure to adhere to company guidelines from its underwriter. However, if the property is the homestead of the principal, the power of attorney must meet the execution requirements set forth for POAs executed in Florida.