Anything to worry about with Power of Attorney for a friend?
May 27, 2011 8:46 AM Subscribe
My friend wants to give me Power of Attorney to close on a house for him; anything I need to worry about?
Long story short: My friend was scheduled to close on a house last Wednesday, but the bank messed up some paperwork and now closing won't be able to happen until next week. Unfortunately, he is leaving for China tomorrow morning and won't be back for two weeks. If he closes after he gets back, he will need to pay a penalty to the seller due to a delayed closing.
Given the situation, my friend wants to give me power of attorney to close on the house for him while he is gone. I would need to go to a closing and sign the paperwork (using my signature) in his name.
I think this is a stupid situation, but my friend is adamant that he wants this to happen. Before I agree to do this for him, is there anything I need to watch out for in this situation? I'm a little uneasy with the whole deal but as long as my name is 100% in the clear then I will do him the favor.
Long story short: My friend was scheduled to close on a house last Wednesday, but the bank messed up some paperwork and now closing won't be able to happen until next week. Unfortunately, he is leaving for China tomorrow morning and won't be back for two weeks. If he closes after he gets back, he will need to pay a penalty to the seller due to a delayed closing.
Given the situation, my friend wants to give me power of attorney to close on the house for him while he is gone. I would need to go to a closing and sign the paperwork (using my signature) in his name.
I think this is a stupid situation, but my friend is adamant that he wants this to happen. Before I agree to do this for him, is there anything I need to watch out for in this situation? I'm a little uneasy with the whole deal but as long as my name is 100% in the clear then I will do him the favor.
Best answer: Make sure it's okay with the bank. When we do closings where we represent the bank, we only allow powers of attorney in *extreme* cases. (Being out of town may or may not qualify as "extreme".)
Your friend will probably need to be reachable the day of the closing, to confirm that he is alive and of sound mind and body and does not want to revoke the POA.
Depending on where you are, your friend can execute the POA so that you *only* have the power to sign on items related to the purchase of the property, if that makes you more comfortable.
You'll sign the documents as "suburbanrobot, as POA for friend's name."
posted by Lucinda at 9:01 AM on May 27, 2011 [1 favorite]
Your friend will probably need to be reachable the day of the closing, to confirm that he is alive and of sound mind and body and does not want to revoke the POA.
Depending on where you are, your friend can execute the POA so that you *only* have the power to sign on items related to the purchase of the property, if that makes you more comfortable.
You'll sign the documents as "suburbanrobot, as POA for friend's name."
posted by Lucinda at 9:01 AM on May 27, 2011 [1 favorite]
My impression is that this is not uncommon, although usually there's more notice. Plenty of folks need to sell a house after they've moved elsewhere.
posted by rmd1023 at 9:10 AM on May 27, 2011
posted by rmd1023 at 9:10 AM on May 27, 2011
Response by poster: Thanks all. The bank actually suggested this solution to my friend so I'm assuming they are good with it. My main concern was that if something went awry with the property, that there could be potential legal recourse against myself (like there would be if I was co-signing the loan, for example). As long as that isn't the case, I am happy to help out my friend, though I still think that he should not agree and should lean on the bank to figure something else out, since it is their fault he isn't closing on time in the first place.
posted by suburbanrobot at 9:42 AM on May 27, 2011
posted by suburbanrobot at 9:42 AM on May 27, 2011
Wait a sec. Back up the bus... He does have a lawyer, doesn't he? If he does why do you even need POA. If he does not have a lawyer lined up for the closing, then he is a fool. The Bank's lawyer is not there to protect him.
posted by Gungho at 10:27 AM on May 27, 2011 [1 favorite]
posted by Gungho at 10:27 AM on May 27, 2011 [1 favorite]
Agreed with gung-ho. He needs to talk to his lawyer and have his lawyer come up with a solution. If your friend does not have a lawyer representing him in this transaction then you should steer clear of any involvement.
posted by dfriedman at 11:16 AM on May 27, 2011
posted by dfriedman at 11:16 AM on May 27, 2011
Response by poster: I have never had a lawyer for any of the 3 homes I have purchased -- only my agent and a title company. Not to sound stupid, but is it commonplace for people to involve attorneys in a simple home purchase? None of my friends have had lawyers present for their closings either to the best of my knowledge.
posted by suburbanrobot at 11:25 AM on May 27, 2011 [1 favorite]
posted by suburbanrobot at 11:25 AM on May 27, 2011 [1 favorite]
I did this for a friend several years back (In California, if that matters). Aside from the initial PoA paperwork and then getting a sore wrist from signing " as attorney in fact for " on a stack of paperwork several inches thick, it was pretty much a non-event. He'd coached me on what to expect, so that I was prepared in case anything odd came up (which it didn't).
Sometimes paperwork needs to happen at inconvenient or impossible times. That's what Power of Attorney is for.
posted by dws at 11:34 AM on May 27, 2011
Sometimes paperwork needs to happen at inconvenient or impossible times. That's what Power of Attorney is for.
posted by dws at 11:34 AM on May 27, 2011
I've signed at the closing of a house for myself and another under a PoA, and refinanced while signing for three people under two PoAs. I think this is quite normal but the PoA needs to be drawn up and executed properly, ideally by the lawyer representing your friend and not by the bank's lawyers. All of the PoAs I've signed under have been restricted to only apply to a particular transaction on a particular day (or date range if there was some doubt).
The only reason I would be nervous about this is the potential for on-the-spot judgement calls that need to be made. At my closing, for example, the old owners had failed to move out on time and we had to draw up a quickie escrow agreement where they would pay $1000 into escrow and we would get it (to pay for trash haulers to remove their stuff) if they weren't out in a week. Assuming you're both informed and empowered enough to make those kinds of decisions, you should be fine.
Also, as others have said, you really ought to have a lawyer there representing your friend, both for these sorts of on-the-spot contracts and in case there is any sneaky language in any of the agreements. The only loan terms that matter, for example, are the ones you sign at closing, and it's not unheard of for your friend to think he's got Loan X and the bank shows up with papers describing Loan Y. I suppose it's a measure of my personal level of paranoia but in the scheme of hundreds of thousands of dollars, paying a lawyer less than a thousand bucks to make sure we weren't leaning on my tenuous ability to read and understand contracts was some of the cheapest money I've ever spent.
posted by range at 11:36 AM on May 27, 2011
The only reason I would be nervous about this is the potential for on-the-spot judgement calls that need to be made. At my closing, for example, the old owners had failed to move out on time and we had to draw up a quickie escrow agreement where they would pay $1000 into escrow and we would get it (to pay for trash haulers to remove their stuff) if they weren't out in a week. Assuming you're both informed and empowered enough to make those kinds of decisions, you should be fine.
Also, as others have said, you really ought to have a lawyer there representing your friend, both for these sorts of on-the-spot contracts and in case there is any sneaky language in any of the agreements. The only loan terms that matter, for example, are the ones you sign at closing, and it's not unheard of for your friend to think he's got Loan X and the bank shows up with papers describing Loan Y. I suppose it's a measure of my personal level of paranoia but in the scheme of hundreds of thousands of dollars, paying a lawyer less than a thousand bucks to make sure we weren't leaning on my tenuous ability to read and understand contracts was some of the cheapest money I've ever spent.
posted by range at 11:36 AM on May 27, 2011
Not to sound stupid, but is it commonplace for people to involve attorneys in a simple home purchase?
Some states, MA for example, require it. Others don't.
posted by atbash at 1:09 PM on May 27, 2011
Some states, MA for example, require it. Others don't.
posted by atbash at 1:09 PM on May 27, 2011
Make sure it is a special power of attorney (public service announcement brought to you by the Armed Forces Network).
/mister Epps
posted by Margalo Epps at 8:28 PM on May 27, 2011
/mister Epps
posted by Margalo Epps at 8:28 PM on May 27, 2011
"X as attorney-in-fact for Y", please, unless the bank has a whole different way they need you to sign as agent. As long as it's clear you are signing as an agent ("X as _____ for Y") rather than individually.
You would be an attorney-in-fact for your friend, nominated by an instrument called a "Power of Attorney." You are not the "Power of Attorney" for your friend.
/pedantic filter
In large transactions, a lawyer is not always necessary but always recommended.
posted by Jezebella at 9:50 PM on May 28, 2011
You would be an attorney-in-fact for your friend, nominated by an instrument called a "Power of Attorney." You are not the "Power of Attorney" for your friend.
/pedantic filter
In large transactions, a lawyer is not always necessary but always recommended.
posted by Jezebella at 9:50 PM on May 28, 2011
This thread is closed to new comments.
Signature : power of attorney for friend's name
which helps clarify things a bit, that you are acting for your friend and not acting as yourself. (I think.) IANAL.
posted by titanium_geek at 8:51 AM on May 27, 2011