Bulletin: AR2011003

Date:
September 07, 2011
To:
All Arkansas Issuing Offices
RE:
Power of Attorney

Dear Associates:  

When dealing with Powers of Attorney caution should be exercised as to the type of POA you are addressing and the necessity for its use. There are four types of POA's generally encountered, they are: A General Power of Attorney which is general in nature and does not specifically relate to a real estate transaction, Durable Powers of Attorney which survive incompetency. Specific Powers of Attorney which are given for a specific transaction and Military Powers of Attorney usually issued by the Provost Marshalls Office for our Service People serving overseas.

When confronted with a POA other than the new (2011) statutory durable statute of limitation discussed later in this bulletin, it pays to begin asking questions such as: "why is it being used"? "where is this person"? If the individual is simply out of town and is in an accessible area you may want to suggest "over-nighting" the documents to the individual for their signature and notarization and return to you. Before you record the documents, you should call them to verify that they are alive and did sign the Power of Attorney. If you are dealing with a Durable POA which may have been given to a family member it is always wise to ask if the person giving the POA is competent. Remember, POA’s do not survive death.

Although use of a power of attorney does present the risk of fraud or impersonation, a person has the right to grant a power and expect that it be used.  Sound underwriting principles require title company personnel to take certain steps to minimize the risk:

  1. inquire as to competency of the maker

  2. determine that the maker is alive before recording documents

  3. contact the maker of the power to ascertain that they are alive, understand that the power is being used and understand the nature of the transaction.

During these times, military powers of attorney are frequently seen. They are usually given to a spouse so the service person may be represented in their absence. We always try to accommodate our military personnel.  Federal law which is superior in this case requires that we accept a military power of attorney.   A military power of attorney can be signed by all military personnel; active, reserve or retired and their families.  They are effective in every state no matter where they are signed.  A military power of attorney may also be signed by certain US government employees when they are being assigned to an overseas location.  A proper military power should contain substantially the following header:           

"THIS IS A MILITARY POWER OF ATTORNEY PREPARED AND EXECUTED PURSUANT TO TITLE 10, UNITED STATES CODE, SECTION 1044b BY A PERSON AUTHORIZED TO RECEIVE LEGAL ASSISTANCE FROM THE MILITARY SERVICES, FEDERAL LAW EXEMPTS A MILITARY POWER OF ATTORNEY FROM ANY REQUIREMENT OF FORM, SUBSTANCE, FORMALITY OR RECORDING THAT IS PRESCRIBED FOR POWERS OF ATTORNEY BY THE LAWS OF ANY STATE, COMMONWEALTH, TERRITORY, DISTRICT, OR POSSESSION OF THE UNITED STATES.  FEDERAL LAW SPECIFIES THAT A MILITARY POWER OF ATTORNEY SHALL BE GIVEN THE SAME LEGAL EFFECT AS A POWER OF ATTORNEY PREPARED AND EXECUTED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION WHERE IT IS PRESENTED." 

10 USCS § 1044a provides:

(a) [language omitted]

(b) Persons with the powers described in subsection (a) are the following:

(1) All judge advocates, including reserve judge advocates when not in a duty status.

(2) All civilian attorneys serving as legal assistance attorneys.

(3) All adjutants, assistant adjutants, and personnel adjutants, including reserve members when not in a duty status.

(4) All other members of the armed forces, including reserve members when not in a duty status, who are designated by regulations of the armed forces or by statute to have those powers.

(5) For the performance of notarial acts at locations outside the United States, all employees of a military department or the Coast Guard who are designated by regulations of the Secretary concerned or by statute to have those powers for exercise outside the United States.

(c) [language omitted]

(d) The signature of any such person acting as notary, together with the title of that person's offices, is prima facie evidence that the signature is genuine, that the person holds the designated title, and that the person is authorized to perform a notarial act.

This means that if you are presented with a military power of attorney which contains the header set out above and signed by a person with a stated military or civilian title, you may rely on that power as being genuine.

General Powers of Attorney are not acceptable for underwriting purposes as they do not survive incapacity nor are they given for a specific purpose. Powers of Attorney are usually not accepted for use when the Grantor of the POA is giving powers for the action of a Trustee or substitute Trustee of a Trust, a Corporation, an LLC, etc. If the operating agreement, by laws, or wording in a Trust do provide for the use of POA’s contact your Underwriter for guidance in such an instance.

Arkansas Statutes 28-68-204:

Arkansas practices will change beginning January 1, 2012, after the passage of Act 805 of 2011 adopting the Uniform Power of Attorney Act.  This Act will cover all powers of attorney created on, before or after January 1, 2012.

A few of the high points regarding this Act are as follows (courtesy of: Raymon B. Harvey, P.A.):

The POA is automatically made durable. It is effective when it is signed or it can be limited to its effectiveness only when the principal becomes incapacitated. Incapacity may be determined by a licensed physician, a licensed psychologist, an attorney or a judge.

All those authorized by the principal may act in accordance with the Health Care Portability and Accountability Act.

When you encounter a POA you may do one of the following: Accept the power of attorney, request a certification or an opinion of counsel. This request must be made no later than 7 days after receipt of the POA and accepted no later than 5 days after the receipt of the certification or opinion. 

What you should do:  UNLESS WE HAVE INFORMATION THAT THE POWER MAY HAVE BEEN SIGNED BY AN INCOMPETENT PRINCIPAL OR IS OTHERWISE FRAUDULENT, WE SHOULD ACCEPT IT.  IF IT BECOMES EFFECTIVE ONLY UPON INCAPACITY THEN WE SHOULD REQUEST THE CERTIFICATION.

You may not request a different form of POA for authority which may be granted in the statutory form of POA given to you.

What you should do:  Arkansas Statute 28-68-204 provides for the attorney in fact to exercise most powers relating to real estate iF the blank for real estate is checked (selected) or such powers are not excluded under the general instructions if "all powers" are checked/selected.

You are not required to accept a statutory form POA if you have knowledge of its termination, or your request for certification, translation or opinion is denied. If you believe in good faith that the power is not valid or the agent does not have the authority to perform the act in question or if you have actual knowledge of a report made to the DHS stating the principal may be under duress or abuse by the agent, you may refuse to accept the power of attorney.

If you refuse to accept the POA you may be subject to a court order mandating acceptance of the POA and liability for legal fees and costs from any proceeding which may confirm the validity of the POA.

These are only a few examples of the changes made in this Act and we encourage you to read the Act in its entirety.  You will find it at the Arkansas State Legislature website: www.arkleg.state.ar.us/assembly/2011/2011R/Pages/Billinformation.  
 
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None