First off, I hope everyone is having a good start to the year! Investors Title uses the beginning of the year for training and analysis for what we need to do to prepare for the future. I believe this year is a bit more challenging because it’s so unclear as to how the year is going to go, in spite of all the “experts” who very confidently predict for us what’s going to happen in the economy and the real estate market. I mean, how many times over the last year and a half has a recession been predicted and yet it hasn’t come to pass? Doesn’t mean it can’t happen, but I don’t think it’s wise to make a business plan for the year with a heavy reliance on the prognosticators, just my opinion.
One question we get asked often is, “How should someone sign a document when they are using a Power of Attorney?” Powers of Attorney are common, right? Let’s examine a few things first. The person that signs the POA is called the “Principal” and the person or persons they appoint to act on their behalf is the “Attorney in Fact.” The Attorney in Fact, then, acts as the agent for the Principal pursuant to the terms and powers in the POA. The vast majority of POAs that are done today are called “Durable” POAs. What does that mean? When a POA is Durable that means that the Attorney in Fact can act for the Principal pursuant to the POA even after the principal becomes incompetent and can no longer act for themselves. In a lot of situations, this is a very valuable feature. Also, keep in mind as with most things, not all Power of Attorneys are created equal, at least not when it comes to using one for a real estate transaction. Many people, for example, have Durable POAs for Healthcare, but those have nothing to do with real estate. Healthcare POAs allow someone else to make healthcare decisions when the Principal is no longer able to do so, and I’ve never seen a Healthcare POA that also provides for real estate powers. Typically, the type of POA called a General Durable Power of Attorney contains powers regarding the Principal’s real estate and related issues and usually works fine for closing a deal. Additionally, many times we will see POAs that are specifically designed to only deal with real estate or even a specific property. These “specific” POAs are what most title companies have available for use on a closing. For all those out there wondering, “Is he ever going to get to the point?”, here you go. Let’s say that our Seller/Principal is John Robinson, and our Attorney in Fact is Mary Robinson. Any instrument signed should be executed as follows, “John Robinson by Mary Robinson, his Attorney in Fact.” The Attorney in Fact’s name should not be signed first because the Principal, not the Attorney in Fact, is the party to the document. I hope that helps. Of course, feel free to call if need be.
I know many people in the industry right now are worried about things changing that have been the same for decades. Things such as Buyer’s Agency, client relationships, and the customs and practices surrounding payment of commissions will all most likely be affected to some degree because of class action judgments and settlements that have occurred or will occur in the future. Furthermore, don’t forget about the Federal Regulation being discussed that has the goal of reducing settlement costs for consumers on some transactions. In any case, it’s all a lot to take in. I think there are two important things to focus on right now. First, we all need to get comfortable with the fact that we will most certainly have to make some changes in how we do business. Not easy to do, but I think it’s a given. Second, all of us should take stock of what we actually do for our clients and customers. What services do we provide? What value do we bring? It’s a conversation every company needs to have. Of course, in my view, many of us bring a great deal of value to the thousands of transactions that close each year in our community, but, I’m not the one that needs convincing. The challenge going forward is to demonstrate that value to the people we serve and that we make a difference for them.
Thanks for subscribing to our newsletter and have a great year!