Not all Power of Attorney documents created equal

The topic of "Power of Attorney" comes up pretty frequently in our office. On an almost daily occurrence, clients ask whether or not a Power of Attorney is sufficient for a client’s upcoming real estate settlement.  

Or, at the 11th hour we are informed someone who should be at settlement will not be attending settlement, and then come to find out their Power of Attorney is insufficient.  

Government mortgage entity Fannie Mae also issued new guidelines regarding the use of Powers of Attorney for purchase transactions earlier this year, so it seems like a good time to revisit the topic of Power of Attorney and discuss the differences between various types of Powers of Attorney.

What is a Power of Attorney?

A Power of Attorney is a written document which grants authority to an agent to act on behalf of a principal, in the event that the principal is unable to make decisions or act on his or her own behalf.  

There are several different kinds of Powers of Attorney, and it is important to understand the differences between them.

A General Power of Attorney is one that allows an agent to make all personal and business decisions on behalf of the principal.  It gives the broadest authorizations to the agent, and it is often used to allow the agent to make medical, legal, financial or business decisions for the principal.

In stark contrast, a Specific or Limited Power of Attorney is one that is narrowly drafted to give an agent power to conduct a specific transaction with specific powers.  For example, a principal could have a specific Power of Attorney drafted authorizing his agent to sell his property at 123 Main Street, Washington, DC, including the authority to sign all documents related to the sale, to include the HUD-1 Settlement Statement, Deed, etc.

In addition, a Durable Power of Attorney is one that remains in effect even if the principal becomes mentally incapacitated.  In order for any Power of Attorney to be accepted as a Durable Power of Attorney, specific language must be included in the body of the document (not just the caption of the document) stating that it shall "not be affected by subsequent disability or incapacity of the principal, or lapse of time."  If the specific language is not included in the document itself, the agent’s power to act on behalf of the principal will end if the principal becomes mentally incapacitated.

As each of the jurisdictions in the DC metro area have different requirements for drafting a real estate power of attorney, we strongly recommend that if you require the use of a power of attorney for an upcoming real estate transaction, you contact our office so that we can provide you with the required form for that particular jurisdiction.  

Or, if you already have a power of attorney, please forward a copy to our office for review, well in advance of settlement, to ensure that all the statutory requirements have been included for that jurisdiction.

Close It!™ House of the Week: Delightful unit, tastefully updated

This week we're looking at a delightful 1-bedroom condo in DC's Barnaby Woods neighborhood, located just a block from Connecticut Avenue and about a mile from the Friendship Heights metro stop. It's listed for $264,990.

Previous owners made lots of updates to this light-filled unit, including a chef's kitchen and a fabulous bath with jet tub. This unit also has a covered patio as well as a separate storage unit. 

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $62,620.26. Monthly payments with carrying charges would then be around $1,572.42 per month. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.

Maryland rule threatens agents with $5,000 fine

Agents concerned about a rule in Maryland that threatens to fine them $5,000 for non-compliance can rest easy recommending Federal Title to their clients. We are fully licensed and all of our licenses are up-to-date.

Visit federaltitle.com/verify any time to verify our licenses for yourself. And please feel free to share the link at your discretion.

For your information, here is the gist of the new regulation that outline the responsibilities of agents who refer their clients to third-party services:

  • Make a referral in writing
  • Verify that the service provider has a current state license
  • Provide the date on which the agent last checked the state-licensing database
  • Provide an electronic link to the licensing record

All referrals provided in connection with “the provision of real estate brokerage services” are affected by the regulation, according to the Washington Post.

"This regulation’s broad scope includes, but is not limited to, referrals to mortgage lenders, mortgage brokers, real estate appraisers, home inspectors, home improvement contractors, plumbers, electricians, heating, ventilation and air-conditioning contractors, and all others who are required to be licensed," according to the Post.

As always, we're looking out for the best interest of our real estate agents and their clients. If you have questions about Federal Title's licenses, please let us know.

Headlines: Construction spending, property values around DC on the rise

Here's a look at what's happening in real estate around the District of Columbia. 

George Mason study says suburbs feeling property tax pinch

The report found that property assessments have reached new highs in D.C. and Alexandria as well as Arlington and Loudoun counties. Over the past five years, values are up 15 percent in Arlington and Loudoun counties, 11 percent in the District and 7 percent in Alexandria. -Washington Business Journal

Construction spending rises more than expected in October

Construction spending rose 1.1 percent, the largest gain since May, to an annual rate of $970.99 billion, the Commerce Department said on Tuesday. -CNBC

Property values rebound in a few DC-area jurisdictions since recession

The somewhat dry-sounding report, “Real Property Assessment Trends in the Washington Region, 2005-2014,” offers an interesting take on property assessments in the region and gives insight into which jurisdictions have rebounded the most (and least) since 2009. -Urban Turf

Where we live: Barracks Row has gone from grit to glamour

Barracks Row is a five-block stretch of Eighth Street SE from Pennsylvania Avenue south to the Washington Navy Yard at M Street SE. In the past year, 297 houses sold in the 20003 Zip code, which covers Capitol Hill Southeast, including Barracks Row, said Rachel Abramson, of Capitol Asset Realty. The prices ranged from $332,500 to $2.85 million. -Washington Post

Did you know? Tenant Opportunity to Purchase Act in Takoma Park, Maryland

If you have been involved in real estate in the DC metro area you have likely come across the DC Tenant Opportunity to Purchase Act. But did you know that Takoma Park, Maryland also has a Tenant Opportunity to Purchase Act ("TOPA")?

The intent of TOPA is to promote the conversion of rentals to owner-occupied housing. Not complying with TOPA does leave the possibility that a court of competent jurisdiction may declare the transfer of the property void.  

As with DC, there are exceptions to the tenant opportunity to purchase. Some transfers that are exempt include transfers to a family member, transfers under a court order, transfers to the State or a local government and transfers of a minority title interest.  For a complete list of exempt transfers, please visit Section 6.32.020 of the City of Takoma Park Municipal Code.   

As the title company, Federal Title will require proof that the seller delivered a written offer of sale at the same price and terms as the third party contract of sale to each tenant, any registered  tenant association, and the City of Takoma Park by first class mail or personal delivery and, except for single family homes, that the offer was posted in a common area.  

For single family homes, the tenant has seven days from the date of receipt of the written offer of sale to provide a written statement of interest, and the City of Takoma Park has 14 days. For properties with two to six units, a group of tenants acting jointly have 14 days, then seven additional days for any individual tenant, then seven more days for the City.  

For properties with seven or more units, a registered tenant association representing at least one-third of the occupied rental units in the rental facility and the City of Takoma Park each have 45 days. (Please note that properties involving four or more units in Takoma Park will also need to comply with Montgomery County’s Right of First Refusal laws).

Similar to DC’s TOPA laws, a tenant does have the right to waive the rights but only if supported by consideration. Also, the closing must take place within 6 months of the offer of sale being mailed or personally delivered. Federal Title will additionally require that both the purchaser and the seller sign a TOPA affidavit. 

This is just a summary of the City of Takoma Park TOPA laws, but the full text can be found at Chapter 6.32 Tenant Opportunity to Purchase.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.