Can I use a Power of Attorney for a New York Real Estate Closing?
I often have clients who, for various reasons, are unable to attend a real estate closing and ask if they can sign a power of attorney instead. A power of attorney is a document in which a person appoints someone to act as their agent and perform certain acts on their behalf. The powers which may be given to your agent are very broad, but there are limits. You cannot grant to your agent the power to make health care decisions. That can only be done in New York State by signing a different document called a Health Care Proxy. Likewise, if you are a fiduciary such as an executor of an estate or trustee of a trust, you cannot delegate your powers to an agent. Otherwise, you can grant to your agent very broad powers, for example, to manage your financial affairs, or limited powers to sign documents on your behalf at a real estate closing.
It is more common for sellers at real estate closings to use powers of attorneys. Most purchasers utilize bank financing and lenders are reluctant to permit the use of powers of attorneys by their borrowers. If you are a purchaser and need to use a power of attorney, check with your bank to see what their policy is concerning powers of attorneys.
If you are a seller or a purchaser whose lender has agreed to permit the use of a power of attorney, you can ask your attorney to prepare the power of attorney, which in New York State is known as the Statutory Short Form Power of Attorney. The form and the meaning of its provisions is set forth in New York State's General obligations Law section 5-1501. The power of attorney will need to be signed by you and the person you appoint as your agent, before a notary public. In the form, you can specify exactly what powers you are giving your agent and limit its use to a particular closing.
At the closing, your agent will need to sign an affidavit that you are alive (A power of attorney is only effective while the principal is alive.), you have consented to the transaction, the power of attorney has not been revoked and is in full force and effect. This affidavit is commonly called a "Full Force and Effect Affidavit." Thus it is generally a good idea that you are available to speak to your agent by phone so that he or she can confirm these facts the day of the closing.
If you wish to use an an existing power of attorney, have it reviewed by your attorney to see if it is acceptable. New York laws concerning powers of attorneys have changed frequently in the last few years and older forms, if they were signed after the effective date of the most recent change, may not be valid.