One morning, Chicago Title escrow officer Annie, 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. Annie'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, Annie had more questions than answers. Below are some of the facts Annie 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.
Annie called the son to explain she needed to talk to his mom directly. The son shouted at Annie, 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, Annie 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 Annie 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, Annie 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 Company is asked to rely on a power of attorney, questions need to be asked. The very same ones Annie posed.
The answers may indicate whether the power of attorney can be relied upon or not. In addition, it is important to:
- Send a copy of the power of attorney to the title officer for review.
- Confirm the agent/attorney-in-fact possesses the original power of attorney.
- Contact the principal to confirm the power of attorney has not been revoked.
- If the principal cannot be contacted, find out why and evaluate whether the power of attorney is still valid or not (e.g., deployed military, in nursing home, deceased, etc.).
- Make sure the principal is aware of the terms of the transaction.
- Verify the principal executed the power of attorney of their own free will.
- Do not accept disbursement instructions from the agent/attorney-in-fact that divert proceeds from the principal.
Neither Annie nor underwriting were comfortable proceeding with the sale. There were too many unanswered questions. She submitted her story to email@example.com with this comment, "I know you all must get tired of coming up with creative ways to 'hold' our attention over…BUT WE ARE LISTENING!!!!"
Annie did not buckle to the pressure or bullying tactics of the seller's son. She used the skills she learned from training to prevent the Company from a possible claim, since she was unable to even verify the seller was still alive. She put an alert in the title plant on the property in question (PIQ) in case the son tried to open this order at another FNF affiliate.
For her efforts Annie is being rewarded $1,500. Training provided by the Company is for the enhancement of both the employee and the Company. Be like Annie and always attend escrow training to gain industry knowledge.
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration