By: Samuel Iden


A Power of Attorney (POA) is a versatile tool that can help clients enter contracts or conduct affairs when their personal availability is limited or restricted. A POA can enumerate broad or narrow powers. A POA can authorize the designated representative to enter financial (e.g. put a mortgage on real property) or business agreements or make health care decisions.  A POA can be durable, meaning powers remain ongoing after an initial affair that triggered the creation has concluded, or non-durable, meaning powers are extinguished after a certain period of time passes or a particular event/transaction has concluded.

It is fairly common to see a POA used by buyers in a real estate closing. They’re most often used when one spouse has obligations that prevent his or her presence at the closing. One spouse uses the POA to sign the documents in the lender’s package on behalf of both.

Is using a POA for a real estate closing ever problematic? Sometimes. Other than adding costs for drafting, executing, returning and recording the POA, there usually aren’t issues with allowing buyers to use a Power of Attorney to close, so long as there are no capacity issues at the time the Power of Attorney is executed (see prior blog entry discussing capacity).

For the sellers, having a POA is a bit trickier. Buyers using a POA are doing so to borrow money. Sellers using a POA are doing so to be paid money, typically a substantial sum, upon closing. This is a different ballgame. Evolving technologies constantly allow society to get more things accomplished with higher levels of convenience. Unfortunately, these same advancements present ever-growing opportunities for fraudsters to implement new hustles, schemes and scams. Real Estate professionals certainly witness the frequency with which fraud is discussed in an effort to spot and avoid it during day to day practice. The North Carolina State Bar, title insurance companies and malpractice insurance providers are constantly communicating with attorneys about nefarious real estate plots that have been spotted and foiled so the community can be on alert if we encounter similar fraud attempts. There are a number of ways fraudsters can attempt to improperly sell a property out from underneath the rightful owner (thereby stealing their sales proceeds in the process) and using a POA on the seller’s side of a transaction introduces a greater opportunity for some of those fraud attempts to find success.

If a rightful owner has real property “stolen” via fraudulent use of a POA, there’s a high probability the subject real property, as well as the faux-seller, buyer, both real estate agents, title insurance company, settlement agent and malpractice insurance providers will each become subject to civil litigation aimed at getting reversing the sale and/or compensating the aggrieved. That would be a nightmare scenario for everyone involved! For the protection of all parties associated with a closing, Jackson Law’s general rule is a POA is not acceptable to use for the execution of seller documents.

With this knowledge, now you can Rest Easy.