[Editor’s note: Fannie Mae recently issued new restrictions on use of Power of Attorney. Please read this article and contact our office with any questions.]
If you must use Power of Attorney, please contact our office.
By now, most of us in the business sphere of residential real estate have become comfortably numb to additional laws and regulations. Starting with last year’s revisions to the Truth-in-Lending Act (TILA) to this year’s Real Estate Settlement Procedures Act (RESPA) reforms, many of us, despite the impact on our business operations, have hardly noticed many of the new legal reforms imposed by state governments.
The most recent reform impacting Maryland residential real estate transactions comes to us compliments of the Maryland General Assembly.
Effective October 1, 2010, individuals utilizing a power of attorney (POA) in order to consummate a real estate transaction should use the new Maryland Statutory Form Limited Power of Attorney; or a form that “substantially” conforms to the statutory form.
Prior to this new law, an individual could use any specific power of attorney form that was acceptable to a title insurance underwriter.
The new statutory form not only requires the principal (i.e., the person granting the authority) to acknowledge before a notary public but also for the form to be attested and signed by two or more adult witnesses in the presence of the principal and in the presence of each other (one of the witnesses may be the notary). In addition, the new law allows the agent (a.k.a., the Attorney-in-Fact) to execute a certification form to certify the validity of the power of attorney and agent’s authority.
A title company must record the executed and notarized certification along with the POA form.
Because of the many associated pitfalls, one should always try to avoid the use of a POA. In those cases when it’s absolutely necessary for a buyer or seller of real estate to use a POA, be very attentive to the legal requirements so as to avoid a closing delay. Federal Title’s website provides more detailed information and instructions for using POAs along with the specific forms required in DC, MD, and VA.