Using Power of Attorney in Real Estate Transactions

Title companies often receive requests to allow one or more parties to a real estate transaction to sign documents through the use of a Power of Attorney.  A Power of Attorney is a written document in which an individual, called the Principal, gives authority to another individual, called the Agent, to act on the Principal’s behalf.  In Texas, Power of Attorney used in a real estate transaction must be recorded in the Real Property Records of the county where the property is located.  The Power of Attorney may be in the form of a Statutory Durable Power of Attorney or a specific Power of Attorney.

The Statutory Durable Power of Attorney is set forth in the Texas Estates Code and a form of this document is typically easily located online.  The Statutory Durable Power of Attorney contains a laundry list of powers that may be given and requires the person completing the form to make a number of selections within the document itself.  Additionally, the Statutory Durable Power of Attorney does not terminate automatically when your transaction ends.  Because a Statutory Durable Power of Attorney can grant the Agent a multitude of powers and be valid until revoked, I typically recommend that persons considering using a Statutory Durable Power of Attorney consult and attorney prior to using the document.

The specific Power of Attorney is typically drafted by an attorney, for a fee, and is specific to the transaction being handled by the title company. Because it is drafted specifically for the transaction at hand, there are no other powers that can inadvertently be granted, and a termination date can be included in the document.

Because of the potential for fraud title companies are often wary of Powers of Attorney.  They will allow them, subject to approval of any lender involved; if the document meets the title company’s underwriting guidelines.  Regardless of which type of Power of Attorney is used, the title company will want to ratify the Power of Attorney by speaking to the Principal on the day the documents are being signed to verify that the Power of Attorney was actually signed by them and that Power of Attorney has not been revoked.  If the Principal is incapacitated at the time of the closing of the transaction, the title company may require verification from the Principal’s physician that the Principal was competent at the time the Power of Attorney was signed and verification from a caregiver that the Principal is still alive.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.