I recently acted as a Realtor on behalf of a buyer in a recent home purchase.  It involved a homeowner who is selling a home which she owns along with her husband.  Her husband is not in good health, and she was acting on his behalf under a Power of Attorney.  This is relatively common, although, if not carefully prepared, executed and in compliance with the laws of the state in which the real estate is located, can be problematic. I thought my recent experience and what you may derive therefrom, is worthy of comment.

A FUNNY THING HAPPENED ON THE WAY TO THE CLOSING

If you are selling your home or other real estate in Florida, and it involves a Power of Attorney, it is critically important that it be reviewed to ensure it complies with Florida law and practice.  And the sooner the better.  If you are listing your home for sale, have it reviewed when you sign the Listing Agreement.  If there are non-compliance issues, you will have the time to work it out.  If you wait until the Sales Contract has been signed, it may cause a delay in your closing, or worse, the deal may go south.

I was recently engaged as the Selling Agent on a home purchase.  (BTW:  When we refer to the Selling Agent, that is the agent on the buying side, whereas, the Listing Agent is on the selling side.) The Seller signed the Contract for herself individually, and as attorney-in-fact for her husband.  I asked the Listing Agent for the Power of Attorney.  Without a valid Power of Attorney, the wife is without the requisite authority to sign for her husband.  To be valid it must comply with the execution formalities of Florida law and practice. Further, only an original Power of Attorney is acceptable for recordation in the Public Records of Sarasota County.  Therefore, reviewing the Power of Attorney, to ensure that it is compliant and that the original is available is essential.  And, better to do so sooner, rather than later, which may cause a delay, or worse, a cancellation of the sale altogether.

The Listing Agent was able to obtain the original Power of Attorney from the Seller.  However, it was a Durable New York Statutory Short Form Power of Attorney.  Problem #1: It was notarized, but not witnessed.  Florida requires 2 independent witnesses, in addition to it being notarized. Problem #2: It provided general authority to the wife for “real estate transaction” matters.  However, the State of Florida requires that a Power of Attorney be specific, i.e., particularly provide that the attorney-in-fact has the “power to convey”.  A mere recital that the attorney-in-fact has general authority for “real estate transaction” matters does not satisfy the Florida statute.  Accordingly, on its face, the Power of Attorney was defective.   Problem #3: The husband had Alzheimer’s.  Therefore, he no longer had the legal capacity to execute a revised Power of Attorney which would conform to Florida law and practice, and permit the sale.  What this meant is that the only way the home could be sold was by Court Order.  This would require hiring an attorney, filing a Petition in Probate Court, appointing a Conservator, an Appraiser, and obtaining a Court Order approving the sale.  A costly and protracted proceeding, during which, the Buyer could cancel and move on to another home.

Fortunately, that did not happen.  This was a second home.  It was NOT (emphasis added) homesteaded, so we benefitted from an exception to the Florida rule which requires 2 independent witnesses for a valid Power of Attorney.  In Florida, if a home is not homesteaded, and this home was not homestead property, then the formality of having 2 witnesses does not apply, PROVIDED (emphasis added), the Power of Attorney conforms with the requirements of execution of the state in which it originated.  New York, the state of origin, does not require 2 witnesses.  Accordingly, the Power of Attorney conformed to the requirements of the State of New York.  However, that still left an open issue.  The Power of Attorney contained a general reference only, granting authority for “real estate transaction” matters.  It did not contain the specific, magic words, required in Florida, granting the “power to convey”.  Well, we got lucky.  New York has a statute that provides that a Power of Attorney which confers general authority in “real estate transaction” matters MUST (emphasis added) be construed as conveying the “power to sell, bargain and convey”.  After some probing, back and forth discussions, The Title Company agreed that the “MUST” construction in the statute was sufficient to provide full faith and credit to the New York statute, such that it served as defacto recognition of the “power to convey”.  It agreed to insure the title, without exception.  However, an “Opinion Letter” from the New York attorney affirming the foregoing and that the Power of Attorney was validly executed in conformance with the formalities of the State of New York was required.  The closing occurred as scheduled, without a delay or extension.

Why am I telling you this story?  Most of the anxiety and frustration experienced could have been avoided had the Power of Attorney been reviewed at the time the home was listed for sale, rather than at the Sales Contract or Closing stage.  In this instance, we were fortunate that the State of New York has a statute which provided a “get out of jail card”.  That is not the case in every state.  Had the Power of Attorney originated in another state, one which did not have a statute similar to New York’s, we very likely may have found ourselves in a long delayed and expensive Probate Court proceeding, provided the Buyer was willing and able to wait.

My deeper point is that selling real estate is not just about getting the highest and best possible price.  Although, no question, that is surely at the top of the list.  But, it means nothing if you can’t get it closed.  To do that requires a thorough understanding of the entire process.  To know the road blocks, the issues.  Knowing the questions to ask, and, when necessary, rolling up your sleeves and getting the job done.   It is the difference between a successful selling experience and one that is not; between closing a sale, and not.   And that, is no small task.  So much depends upon who you have on your side.