In previous issues of this magazine, I covered the use of a Power of Attorney (a “POA”) in real estate transactions for those situations in which a party (the “Principal”) is not available to sign documents at a closing and appoints a third person, known as the Attorney-in-fact (“AIF”), to sign on his or her behalf. I also discussed the proper format of execution of a POA, as well as the proper format of execution of documents by the Attorney-in-fact, and also the use of the statutory form Power of Attorney known as a Durable Power of Attorney.
Since I wrote those articles, the Florida Legislature has significantly amended certain provisions of the Power of Attorney Act, in order to conform Florida’s Power of Attorney law to the uniform Power of Attorney Act that is used in most states. This article addresses relevant provisions of this new legislation which amend certain requirements when executing a POA, and also delineates the rights of third parties to accept or reject the use of a Power of Attorney executed in another state.
Under the law in existence prior to October 1, 2011, a POA had to be executed with the same formalities as the document that would be signed by the AIF on behalf of the Principal. Since a deed, for example, needs two witnesses, the POA also needed two witnesses. A mortgage, on the other hand, does not require witnesses, and therefore the POA did not require witnesses. Although there were certain exceptions to these rules prior to the effective date of the new legislation, under the revised guidelines two witnesses are now required on all Powers of Attorney executed in Florida. Under the new law, therefore, all Powers of Attorney (except for military POAs which are governed by different rules) executed in Florida on or after October 1, 2011 must be signed by the Principal, have two witnesses, and be acknowledged by the Principal before a notary public.
What if the POA was executed prior to October 1st? There is a savings clause in the new legislation, which provides that a Power of Attorney executed before October 1, 2011 is valid as long as its execution complied with the laws of Florida at the time it was executed. There is no reason to obtain a new POA, therefore, if it was executed before October 1st – as long as it was properly executed at that time.
What if you have a Power of Attorney signed in another state? The law now provides that any POA executed in another state, whether executed before or after October 1, 2011, is valid as long as you can determine that it complied with the laws of that jurisdiction. How can you make that determination? The new act also provides a solution – the third person who is to rely upon the POA may timely request, at the Principal’s expense, an opinion of counsel in that foreign state as to any matter of law concerning the POA, including its due execution and validity. The opinion, if provided, may then be relied upon by the requesting third party. If the legal opinion is not provided, then the third person making the request can refuse to rely upon the POA. If the opinion is provided, and the requesting party refuses to rely upon the opinion, then the rejecting party must provide in writing the reason(s) for the rejection. Further procedures are then outlined in the statute for each party’ rights and remedies.
The standard for the POA executed in another state is, however, modified by Florida’s homestead law. It provides that whenever a Power of Attorney is used with a deed or mortgage of Florida homestead property, the Power of Attorney must also be executed with the same formalities as a deed – i.e. two witnesses. As a result, even if the out-of-state legal opinion provides that the POA is valid under its laws, if the property is Florida homestead and the POA does not include the requisite witnesses, then we will not be able to rely upon the out-of-state POA. Note that this analysis has also been confirmed by Florida’s title insurance underwriters.
Another section of the new law provides that a photocopy or electronically transmitted copy of an original Power of Attorney has the same effect as the original. This section, however, cannot be relied upon for a real estate transaction, since it is in conflict with the Florida recording statutes, which provide that only documents with original signatures (and not photocopies) may be recorded. The original POA, and not a photocopy, must therefore be recorded. The sole exception to this rule is the recording of a certified copy of an original Power of Attorney that has been recorded in another county in Florida.
One type of Power of Attorney permitted prior to the effective date of the new act, the springing Power of Attorney, provided that the authority granted to the AIF would not take effect until a particular event occurred (e.g. when the Principal has been determined by the Principal’s physician to lack the capacity to manage the real property). Under the new act this type of POA is no longer permitted – only a POA in which the AIF can immediately exercise his or her powers is valid. Note, however, that a springing POA executed before October 1st may still be valid.
The new act also provides for more specific delineation of certain powers. For example, a Power of Attorney might include the right for the Attorney-in-fact to gift real property. Prior to October 1st, the language authorizing the AIF to make a gift might be somewhat vague or difficult to locate within the POA – raising the question of whether the Principal truly understood this permission. Under the new act, the intent of the Principal to allow gifting must be separately delineated, and the Principal must initial the clearly set off gifting provision.
The new Power of Attorney Act has made many changes to the existing law. Not only should you contact your attorney if you have any question about the validity of any Power of Attorney that was executed before October 1, 2011, but you should also be certain to contact your attorney to prepare any new Power of Attorney that you may need in order to ensure that it meets with the current requirements of Florida law.
This Article is not a substitute for hiring an independent attorney
to prepare and review your Power of Attorney.
Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank’s legal practice has concentrated on complex real estate, tax and corporate transactions throughout Central Florida. Frank has been involved in the Central Florida community for more than thirty years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980.
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