One morning, one of our Chicago Title Escrow Officers began to mentally organize her day while on the way to the office. She had one file on the top of her mind.
The file was a sale transaction where the seller appointed her son, via power of attorney, to act as her agent/attorney-in-fact. She was told the seller was elderly but her last email with the son was bothering her. The Escrow Officer’s training kicked in. She started to ask herself:
– Why was there a need for the power of attorney?
– Where was the mother?
– Why was she unable to sign the documents herself?
So far, none of the answers provided by the seller’s son were acceptable. In fact, the Escrow Officer had more questions than answers. Below are some of the facts she was struggling with:
• The power of attorney was signed by the seller in 2019.
• The listing real estate agent never met with the seller — only her son.
• The real estate agent believed the mother was alive and well, but when the seller information sheet came back, her forwarding address was in an entirely different city than where the property was located.
• The son also wrote on the sheet escrow was not authorized to contact the seller directly.
The Escrow Officer called the son to explain she needed to talk to his mom directly. The son shouted at her, stating she would never talk to his mother and she was to rely on the power of attorney. He continued to raise his voice. Since they were failing to communicate, the Escrow Officer explained he could call her back when he could speak to her in a calm and professional manner and hung up.
The next time they spoke the Escrow Officer gave the son two options. Either his mom could attend the closing in person, or his mom could sign a new power of attorney specific to the transaction at hand. Once again, the son raised his voice and lost his manners.
The son followed up with an email stating, “Getting a new POA signed at this point would be troublesome.” He also requested a mobile signing agent come to him. At that point, the Escrow Officer escalated her concerns to management and underwriting.
The use of a power of attorney is always a cause for concern. The title insurance industry has experienced several problems and claims, based on the improper use of powers of attorney. Below, let us review some best practices which should be followed when a principal in a transaction has appointed an agent/attorney-in-fact.
• A power of attorney is an instrument in which an individual, called the principal, appoints an agent, also called the attorney-in-fact, to act on his or her behalf for some stated purpose or purposes.
• The power may be limited to a particular activity, such as closing the sale of the principal’s home, or can be general in its application.
• The actions of an agent/attorney-in-fact are legally considered those of the principal.
• The power may give temporary or permanent authority to act.
Each time the Title Company is asked to rely on a power of attorney, questions need to be asked. The very same ones the Escrow Officer posed. Neither the Escrow Officer nor underwriting were comfortable proceeding with the sale. There were too many unanswered questions.
If we have a transaction with you and we ask questions, it is not because we are trying to be difficult. There are so many reasons for us to verify information like this scenario above.
Article provided by contributing author:
Corporate Escrow Administrator