October 2009 Vol. 2, No. 10
 

Underwriters' Bulletin

Claims Corner

Power of Attorney

Solutions to Three Problems with Powers of Attorney

A power of attorney is used in many transactions. Usually the power of attorney form is filled out properly and is used without any problem. However, from time to time, ATG has had problems with some aspects of a transaction that involved a power of attorney.

The most common problem that is often caught at the closing table is the statutory power of attorney from being used for the borrower's agent to sign a mortgage. For the statutory form to be used in connection with signing a mortgage, the form must not have the "borrowing transactions" lined- out. Frequently, all but the "real estate transactions" text is lined-out. SeeATG Form 4003: Illinois Statutory Short Form Power of Attorney for Property.

Occasionally, power of attorney forms will be used that are not the statutory form. If a power of attorney is being used that is not the statutory form, ATG will examine the power of attorney to ensure that it contains the following:

  • Principal's name is either typed or handwritten somewhere on the power of attorney;

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  • Principal's signature, notarized by someone other than the agent;

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  • Date of execution and notary is before or on the date of closing;

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  • Required amount of open space in the right hand corner of the first page for the recorder's office;

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  • Property address, PIN, and the legal description is attached;

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  • Name of person who prepared the form; and

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  • Language indicating that the agent can sign the deed or sign the mortgage.

Another problem ATG encounters is usually not discovered until after the closing. ATG has had claims where the principal who gave the power of attorney to an agent has claimed to not have executed the power of attorney. In all of the claims, the ATG title agent has not met the principal who was their client. Typically, some relative has approached the ATG title insurance agent and provided an already-executed power of attorney. Sometime after the closing ATG is contacted by the person who is the principal and who is claiming to have never signed the power of attorney. These claims could likely have been avoided if all attorneys made sure to meet the individual who is the principal in the power of attorney.

If you have any questions about using a power of attorney, contact the ATG Underwriting Department,legal@atgf.com, 217.403.0020, or 312.752.1990.

© ATG|Casenotes/Bulletin 0910_v2n10

[Last update: 10-21-09]

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