A real estate power of attorney is a powerful document in Florida. Here's everything you need to know about them and whether you need one.
- Anyone can use a power of attorney in real estate transactions
- A real estate power of attorney should meet all of Florida's legal requirements
- A power of attorney can be rejected if it's not correctly drafted or executed
- You need a real estate attorney to help you with your power of attorney
Do you lead a busy life that denies you the time to attend to important transactions? You shouldn't worry if you do, because you can utilize a power of attorney (POA) to let a trusted person handle transactions for you. Florida's laws even allow you to use a POA in real estate transactions.
However, POA matters can get complicated because legal challenges can arise if you don't formulate or execute the POA correctly. Here's what you need to know about this critical document and how a real estate lawyer can secure its drafting and execution.
What is a power of attorney?
A power of attorney is a legal document authorizing a representative to transact official business for you. In a real estate transaction context, any POA form you use should comply with Florida's POA laws and statutes. The document should also abide by lender mortgage requirements and the title company's guidelines. This way, you don't need court intervention to legalize the transaction.
So, why should a Floridan use this document for their real estate transactions? One, a person needs to use this document when they're too busy to attend a transaction's closing. Two, it comes in handy when a property owner lacks the mental capacity to handle sensitive commercial transactions.
A Florida POA has three principal parties, namely:
- The principal: The person who authorizes an agent to transact for them.
- The agent or attorney-in-fact: The person whom the principal authorizes to transact for them, although they don't necessarily need to be lawyers.
- The third party: The person or institution with which the agent deals on their principal's behalf. These might include real estate brokers, banks, or property buyers.
A Florida power of attorney legally remains effective until any of the following events occur:
- The principal dies
- The POA's power expires
- The POA's purpose ends
- The court rules to determine that the principal is partially or fully incapacitated
What a real estate POA must include
A Florida real estate POA must:
- Identify the property that needs to be bought or sold, including its address.
- Name the POA's principal, agent, and any other alternative agents.
- Allow the agent to sign all the relevant transaction documents if the principal is the buyer.
- Authorize the agent to sign deeds and other documents where the principal is the seller.
- Identify that the authority applies to particular circumstances, for example, the closing. Giving more specific authority is usually better than broad powers.
Legal requirements for a POA in Florida
A principal intending to draft a power of attorney in Florida must meet certain legal requirements that validate the POA. Here are some of them.
- The principal and their agent must be sane adults 18 years or older.
- The POA's principal must physically sign it before at least two competent witnesses (who must also be sane adults).
- A notary public must also sign the document.
- A notary public must also acknowledge the principal's signature on the POA to be legally valid and enforceable in Florida. However, military POAs and those created under other states' laws are exempted.
- Sometimes, the principal may need to record the original POA with the applicable Recorder of Deeds and an affidavit to confirm that the document is still effective.
Please note that some POAs aren't automatically valid in all real estate transactions in Florida. Therefore, it's necessary to check and confirm them with individual mortgage or title companies before closing a deal.
Why you need a real estate attorney for your POA transactions
Why should a real estate attorney assist in drafting, reviewing, and executing your POA? You need a real estate lawyer's help to transact safely and overcome common POA challenges. Some of these bottlenecks are:
- The possibility of using defective POA forms that mortgage or title companies could reject: Some POA principals use forms from internet searches, other states, or office supply stores to draft their POAs. The problem is that any form that doesn't meet Florida's legal requirements can't be used to close a real estate deal. A lawyer will spot these problems before you waste your time drafting a document that will be rejected.
- Notarization requirements: Florida's statutes require every POA to include two witness signatures and that of a notary public. An attorney's help is indispensable in this process. Additionally, lenders that permit POA usage usually require that the document specifically identifies the property, borrower's name, and loan number.
- Stricter underwriter guidelines: Most Florida title insurance underwriters follow stricter guidelines requiring you to record the original POA with the executed mortgage or deed.
- Careful agent selection: You need a lawyer's help in selecting the right attorney-in-fact. The reason is that Florida's statutes forbid all persons with any financial interest in a transaction to serve as POAs. Failing in this area alone could invalidate your entire power of attorney. Therefore, sound legal counsel is necessary to lockout illegal parties like commission agents.
Closing remarks on a Florida power of attorney
People find themselves unable to close real estate deals in Florida for various reasons. Some may be mentally incapacitated or unable to attend a deal's physical closing. Thankfully, Florida's laws allow POAs to transact for their principals.
However, POAs have many legal implications and pitfalls that could undermine one's efforts. Principals should be careful how they draft and execute their POAs to avoid falling victims to these legal challenges.
The good news is that you can collaborate with an expert property lawyer to help during your POA's drafting and execution process. You can enlist Peyton Bolin's legal team to help you navigate your way successfully. Go ahead and contact our office today for expert help with POA drafting and execution.