A "power of attorney" is a written instrument by which a person (the "principal") appoints another as agent (the "attorney in fact") and confers upon the agent the power to perform certain specified acts on behalf of the principal.

A power of attorney creates an agency relationship, with the giver of the power remaining the legal owner of any property involved. A power of attorney may be general or special.

General

A power of attorney which confers authority to execute certain real estate transaction without specifications of any particular property or without any power limitation.

Special

A power or attorney which authorizes the execution of a specified real estate transaction or establishes certain power limitations.

Durable or Continuing

Certain jurisdictions recognize the existence of "durable" or "continuing" powers of attorney. It is one which continues to be valid though the principal has become incompetent and allows (in some states) the attorney-in-fact to continue to bind the principal's estate even though the principal is deceased, if the party relying upon the power has no notice of the principal's death.

The exact wording of power of attorney in so far as it authorizes any particular act affecting the property should be carefully examined even though it purports be a "general" power.

In this respect, the following are some generally accepted interpretations of the language in a power of attorney:

• Power to sell is not a power to convey.
• Power to 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 or real estate, but a power "to attend to all business affairs appertaining to real or personal estate" is too indefinite.
• Power to "negotiate" a lease does not authorize the execution of a lease by the attorney-in-fact. Neither does a mere power to sell, without further authorization, ordinarily authorize the execution of a contract or sale.
• General words in a power of attorney are limited and controlled by particular terms. Thus where the authority to perform specific acts is given, and general words are also employed, the latter are limited to the particular acts authorized.

Almost all jurisdictions require that a power of attorney be acknowledged or proved, and/or witnessed, and almost all require that, in order to be recorded, a power of attorney must be executed with the same formalities as a deed.

For title insurance purposes all acts by an attorney-in-fact must be authorized by a duly recorded power of attorney. In some cases, title company may require that the power of attorney authorizing the sale and conveyance of property specifically describe the property to be sold and conveyed.

When a power of attorney is recorded, a certified copy thereof may be recorded in other counties with like effect as though the original were recorded. A revocation should be recorded in every county in which there is the record of the original or certified copy of the power of attorney.

In general, any person natural or artificial, who is competent to contract, may execute or act under a power of attorney, unless he has interests adverse to those of the principal of which the latter had no knowledge.

A corporation may give a power of attorney and become bound by the act of its agent, provided that the agent is appointed by the board of directors and there is no sale of all the assets. If authorized by its articles, a corporation may act as an attorney-in-fact. A partnership or partner may also give a power of attorney, if authorized by all the partners.

Two or more persons, either jointly or severally, may be appointed as attorneys-in-fact.

Fiduciaries (trustees, conservators, guardians, executors, personal representatives, etc.) may not execute powers of attorney or otherwise delegate their authorities and responsibilites unless the document that establishes such authorities and responsibilities (turst agreement, court order apppointing, will, etc.) provides for such delegation of authority.

Aside from those prohibitions specifically contained in the power of attorney, and unless otherwise authorized by state law, an attorney-in-fact is prohibited from:

• Making a gift deed.
• Making a deed, mortgage or release without receiving a valuable consideration. (The full consideration should be stated in the instrument.)
• Dealing with his principal's property for attorney in fact's own benefit.
• Delegating his authority, unless expressly authorized.
• Deeding his principal's property to himself or releasing a his/her debt to the principal, or mortgaging the principal's property to himself/herself.
• Making a partition, unless expressly authorized.
• Conveying or encumbering homestead property (in some states).

The termination of the authority to act under a power of attorney is controlled and governed by:

• The general rules of agency.
• State statutes.
• The provisions of the instrument.
• The power of attorney being a "durable" one.

Subject to the above, a power of attorney is generally terminated by:

• Revocation by the principal.
  
  In all jurisdictions, a power of attorney may revoke by a written revocation. Many states require that such a revocation must be recorded to be effective, and other specify that a revocation must be recorded to be effective only if the power of attorney is also recorded.
  
  
• Death or incapacity of the principal.
  
  In some states a recorded power of attorney continues despite death or incompetence of the principal for those dealing thereunder in good faith and without notice of the principal's death, even if it is not a durable power of attorney.
  In some states, a non-durable power of attorney is effective beyond the death of the principal until the attorney-in-fact has actual knowledge of the death.
  
  Finally, in many other jurisdictions, a power of attorney, if it is not a durable power is terminated by death, incompetence, or insanity of the principal.
  
  
• Expiration of its term.
• Death of the agent.
• Renunciation of agent.
• Incapacity of agent.
• Bankruptcy of the principal.

Underwriting Guideline: If you have knowledge of the death or incapacity of the principal, do not insure without the approval of Stewart underwriting.

Insurance based upon acts executed pursuant to powers contained in a power of attorney presents an additional risk to the Company.

In order to evaluate the legality of any act to be executed by the attorney-in-fact extensive consideration must be given to the following items:

• Why is the power of attorney being used?
• Where is the principal residing?
• Why doesn't the principal execute the transaction?
• Has a determination been made as to the death, incompetence or insanity of the principal?
• Is the power sought to be exercised by the attorney-in-fact specifically authorized in the power of attorney? Is there any ambiguity as to the powers given?
• Has the power of attorney been acknowledged or proved?
• Has the power of attorney been recorded? (even in states where recordation is not required, it is necessary to file it for record in order to maintain continuity in the chain of title).
• Has any revocation been filed?
• Is the attorney in fact exceeding any limitation imposed on him by the power of attorney, rules of agency or local statutes?
• Is the property involved "homestead" property?
• Are there any circumstances, evidence or information making it necessary to raise any question as to the bona fide condition of the transaction or the good faith of the parties?
• Is the principal affected by bankruptcy proceedings?
• Are there any statutory limitations?
• Is there any possibility of the power of attorney being a forged instrument?
• How long ago was the power of attorney executed?
• Can you confirm with the principal that the power of attorney has not been revoked and that the principal wants to complete the transaction?