Suppose your aging mother has decided to sell her home and move into assisted living. The sale is essential for her to afford her new accommodations. She has a buyer and a closing date. But suddenly she has a medical emergency that lands her in the hospital and is not able to attend the closing. What happens to the real estate transaction?

If she’s done some estate planning with her attorney, she should have a Durable Power of Attorney (DPA), which allows her as the principal to grant an agent the authority to sign for her under circumstances specified in the DPA document. Often, a DPA includes the power to sign documents related to the sale and disposition of real estate.

Putting this clause into practice, however, often requires a thorough analysis and multiple steps to make sure that the signed deed is valid and enforceable.

The Principal Is Always the Preferred Signatory for a Real Estate Transaction

As a general rule, a deed signed by the principal is always preferred to a deed signed under a Durable Power of Attorney. This eliminates questions about authority and (assuming other legal standards, such as proper dating and notarization, are met) whether the deed is valid and enforceable. In fact, regarding property sales, drafters representing the buyer often will include a provision stating that “the deed is to be signed personally and not under a Power of Atorney” just to avoid potential issues.

Follow These Steps If the Agent Must Sign a Deed Under a Durable Power of Attorney

Nonetheless, as in our hypothetical case, it’s not always possible for a principal to sign the deed. Let’s say your mother has designated you as her agent in her DPA. You and her attorney will need to take a few extra steps and be sure they are strictly followed to make sure title to the property passes cleanly:

  1. Whether the real estate transaction is a sale to a third party or a transfer between family for no consideration, you should disclose that the deed will be signed under power of attorney as soon as possible. This helps to avoid any last-minute surprises and lets everyone have sufficient time to prepare and review necessary documents.
  2. In most cases, your mother’s DPA document should be recorded. This is necessary to ensure that the appointed agent is the person who will be signing, and that this individual actually has the power to sign.
  3. Follow a specific order to sign the deed. As a general rule, the agent should sign the principal’s name first, followed by the agent’s name as the principal’s attorney-in-fact under the DPA.
  4. Have the deed reviewed by an attorney or title examiner prior to execution and recording, to make sure that the deed and signature block are completed properly.
  5. Other documents will often be required and recorded, such as an affidavit by the agent certifying that the power of attorney is still valid and has not been revoked.

Why does it matter? Failure to follow these steps could create problems in the chain of title when the property is conveyed again. If you are planning to convey property using a Durable Power of Attorney or planning to sign for someone as their agent, be sure to consult with an attorney, first, to avoid future problems. Our real estate attorneys at Mountain Dearborn will be pleased to answer your questions. Contact us here.