Bulletin: CO000043

Dear Associates:

Numerous questions have arisen regarding what is an acceptable form and signature on a Power of Attorney and who has authority to execute or act under a Power of Attorney in Colorado. This Bulletin will address these questions.

The Underwriting Manual Section 15.52 provides an excellent description of the types of Power of Attorney and considerations when insuring transactions through the use of a Power of Attorney. Before accepting a Power of Attorney, be sure to consult this section of the Manual.

WHAT IS AN ACCEPTABLE POWER OF ATTORNEY FORM?

An attorney-in-fact is given only those powers granted to him/her by the principal as specifically set forth in the Power of Attorney. For example, the power to receive sales proceeds must be specifically set forth in the Power of Attorney. While Colorado has a statutory form of Power of Attorney, this is not the only acceptable form used in the State. C.R.S §15-1-1302. Title agent should carefully examine the language of the Power of Attorney to determine if the attorney-in-fact is authorized to perform particular acts affecting the property involved in the transaction. If possible, the Power of Attorney authorizing the sale, conveyance or encumbrance of property should specifically describe the property to be sold and conveyed. Remember:

• Power to sell or transfer is not a power to mortgage.
  
  
• Power to sell and convey is not authority to exchange.
  
  
• Power to "make and execute conveyances" authorizes a transfer of real estate, but "power to attend to all business affairs appertaining to real estate" is too indefinite.
  
  
• Power to "negotiate" a lease does not authorize execution of a lease by the attorney-in-fact.
  
  
• Power to "sell", without further authorization, authorizes the execution of the contract or sale and not execution of the deed.
  
  
• General words in a power of attorney are limited and controlled by particular terms. Where the authority to perform specific acts is given and general words are also employed, the latter are limited to the particular acts authorized.

COMPANY POLICY: CONFIRM THAT ALL ACTS AFFECTING THE PROPERTY INVOLVED IN THE TRANSACTION BY AN ATTORNEY-IN-FACT ARE AUTHORIZED BY A DULY RECORDED POWER OF ATTORNEY. DO NOT ACCEPT A POWER OF ATTORNEY WHICH DOES NOT AUTHORIZE THE ATTORNEY-IN-FACT TO PERFORM PARTICULAR ACTS AFFECTING THE PROPERTY INVOLVED IN THE TRANSACTION. CONSULT YOUR LOCAL STEWART UNDERWRITER IF YOU HAVE QUESTIONS REGARDING THE ACCEPTANCE OF A PARTICULAR FORM OF POWER OF ATTORNEY.

WHAT IS THE ACCEPTABLE SIGNATURE FORM?

Colorado's statutory Power of Attorney form does not have a statutory signature block. The statute simple says that the signature of the principal or attorney-in-fact must be acknowledged. For title insurance purposes, we prefer not to have the words "attorney-in-fact" handwritten in the name of the person giving the Power of Attorney. The standard is whether the signature effectively convey that the attorney-in-fact is signing for another in their capacity as attorney-in-fact? Therefore, the following are acceptable forms in Colorado:

1. {Signature of Larry Jones}
   
   Jim Smith by Larry Jones, Attorney-in-fact
   
   
2. {Signature of Larry Jones}
   
   Larry Jones, as Attorney-in-fact for Jim Smith
   
   
3. Jim Smith {handwritten by Larry Jones or pre-typed}
   
   By: {Signature of Larry Jones}
   
   Larry Jones, Attorney-in-fact

The following form is not acceptable in Colorado:{Signature Jim Smith}

Larry Jones (no indication of capacity)

COMPANY POLICY: CONSULT YOUR LOCAL STEWART UNDERWRITER IF YOU HAVE QUESTIONS REGARDING WHETHER A SIGNATURE EFFECTIVELY CONVEYS THAT THE ATTORNEY-IN-FACT IS SIGNING FOR ANOTHER IN THEIR CAPACITY AS ATTORNEY-IN-FACT.

WHO HAS AUTHORITY TO EXECUTE OR ACT UNDER A POWER OF ATTORNEY?

Generally, any person who is competent to contract may execute or act under a Power of Attorney unless he has interest adverse (i.e. transaction involving a conflict of interest) to those of the principal in which the principal has no knowledge. Best practice would not allow for mortgage brokers to sign deeds of trust on behalf of borrowers or realtors to sign deeds on behalf of sellers. While a corporation may give a power of attorney, the attorney-in-fact must be appointed by the Board of Directors by Resolution. Otherwise, a corporation may act as attorney-in-fact only if the Articles of Incorporation authorize it. Where a partnership or partner in a partnership executes a Power of Attorney, the Power of Attorney must be authorized by all the partners or the authority must be granted in the Partnership Agreement. Where a Managing Member or Member of a Limited Liability Company executes a Power of Attorney, the Power of Attorney must be authorized by all the members or the authority must be granted in the Operating Agreement.

In Colorado, neither a Personal Representative nor a Trustee or other Fiduciary is granted the power to delegate his or her authority to someone else by statute. C.R.S. §15-1-1304. The power and authority flows from the statute to the Personal Representative, Trustee or Fiduciary and upon vacancy flows to the next person in line. Such persons may not delegate the powers granted to them in their office personally to someone unless this power is specifically granted to the fiduciary by the Court or instrument granting these powers. Since a Personal Representative holds an 'office' appointed by the court, the Personal Representative only acquires the authority to delegate his/her powers to some else by Court Order or in the Letters of Administration. C.R.S. §15-12-103. Likewise, if a Trust document granting powers to a Trustee makes no provision for execution of a Power of Attorney, the Trustee may not grant these powers to an attorney-in-fact.

COMPANY POLICY: TITLE AGENTS MAY NOT ACCEPT A POWER OF ATTORNEY FROM A TRUSTEE, PERSONAL REPRESENTATIVE OR OTHER FIDUCIARY WITHOUT EITHER A COURT ORDER OR TRUST DOCUMENT OR OTHER INSTRUMENT GRANTING THE PRINICPAL THE POWER TO DELEGATE TO SOMEONE ELSE. BE SURE TO CONFIRM THAT POWER(S) OF ATTORNEY FROM BUSINESS ENTITIES ARE PROPERLY AUTHORIZED EITHER BY THE FORMATION DOCUMENTS OR WITH PROPER AUTHORIZATION FROM THE ENTITY.

DURATION OF THE POWER OF ATTORNEY

Generally, the terms and provisions of the Power of Attorney will indicate the duration of the Power of Attorney. Unless the Power of Attorney is "durable", there is an additional risk to the Company in accepting a Power of Attorney. We prefer that all Powers of Attorney be "durable." In order to be a "durable" Power of Attorney, the instrument must contain the statement "this power of attorney will continue to be effective even though I become disabled, incapacitated, or incompetent". C.R.S. §15-1-1303. This shows the intent of the principal that the powers granted may be exercised notwithstanding later disability, incapacity, or incompetency." In order to accept any Power of Attorney, be sure to confirm the following:

• The principal wants to complete the transaction.
  
  
• The principal is not deceased or in bankruptcy.
  
  
• The principal has not revoked, modified or amended the Power of Attorney in writing.
  
  
• The terms of the Power of Attorney have not expired nor do the provisions of the instrument provided for termination.
  
  
• The attorney-in-fact is not deceased.

Generally, there is a presumption that a Power of Attorney, which is executed by the principal within a year of the transaction, is acceptable unless the title agent has specific knowledge to the contrary. A Power of Attorney that is more than a year old must be approved by underwriting.

COMPANY POLICY: WE PREFER TO ACCEPT DURABLE POWERS OF ATTORNEY. IF THE POWER OF ATTORNEY IS NOT DURABLE AGENTS SHOULD CONSULT WITH UNDERWRITING BEFOFE ACCEPTING THE INSTRUMENT. ALSO, IF YOU HAVE KNOWLEDGE THAT THE PRINCIPAL IS IN BANKRUPTCY OR THE PRINCIPAL DOES NOT WANT TO COMPLETE THE TRANSACTION, DO NOT INSURE WITHOUT APPROVAL FROM YOUR LOCAL UNDERWRITER. IF YOU HAVE KNOWLEDGE THAT THE PRINCIPAL OR ATTORNEY-IN-FACT IS DECEASED OR THE PRINIPAL HAS REVOKED THE POWER OF ATTORNEY IN WRITING, DO NOT ACCEPT THE POWER OF ATTORNEY. A POWER OF ATTORNEY THAT IS MORE THAN A YEAR OLD MUST BE APPROVED BY UNDERWRITING.

Remember that selection of legal forms and the "preparation of receipts and options, deeds, promissory notes, deeds of trust, mortgages, releases of encumbrances, leases, notice terminating tenancies, and demands to pay rent or vacate [and other legal instruments including Power(s) of Attorney], by completing standard and approved printed forms, coupled with the giving of advice or explanation as to legal effect thereof, constitutes the practice of law." Title Guaranty Company vs. The Denver Bar Association, 312 P.2d 1101 (1957). Title companies are prohibited from engaging in the practice of law in Colorado.

IF YOU HAVE ANY QUESTIONS REGARDING THE ISSUES RAISED BY THIS BULLETIN, PLEASE CONTACT YOUR LOCAL UNDERWRITING PERSONNEL.