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Powers of Attorney 101

Some financial institutions have big problems with the use of Powersof Attorney when closing real estate transactions. How should weapproach this?

Q. We have purchased a new home but my spouse is planning on being away for the closing. We have approached our lawyer and asked for a solution. She has stated that you can use a Power of Attorney and sign on behalf of your spouse but that some financial institutions have big problems with the use of Powers of Attorney when closing real estate transactions. How should we approach this?

A. The basis for this shift in due diligence by the banks is the increase in mortgage fraud and the pursuant identification requirements that any recent purchasers have experienced when signing documents for the purchase (or sale) of their home. The law societies across the country have addressed the issue of mortgage and transfer fraud and place the onus on the lawyer for you to prove who you are before they advance funds.

By using a Power of Attorney you are signing on behalf of the person who rightfully owns the property to complete whatever transaction is planned for; whether that be a sale or a re-finance. The problem blooms when there is an improper or forged Power of Attorney being used by the individual who comes in to sign.

The best way to avoid this type of fraud is for the original person who is giving their power of attorney to sign the stated Power of Attorney at the same lawyer’s office and provide photo identification along with signatures and independent witnesses. Then, when it comes to time to purchase, sell or re-finance a property, the lawyer can attest to the fact that the Power of Attorney is properly in effect and not fraudulent.

Still, some financial institutions are very reluctant to have any of their borrowers use any Powers of Attorney during the purchase process. Some are “gun shy” having being burnt in the past. Most are just reacting to the tightening of the credit market.

– Jeffrey D. Cowan is with Cowan & Taylor, Barristers & Solicitors. The info in this article
should not be relied upon as legal advice.

 
 
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