Power of Attorney (POA) is a legal document used to designate another individual to act on your behalf. POA helps your agent handle your financial and legal affairs should you be incapacitated. That makes it an essential part of real estate planning.
On December 15, 2020, the New York State signed a bill that suggested a few changes and revisions relating to powers of attorney. The new regulations took effect on June 13, 2021. This post highlights some of the changes and what they mean to real estate attorneys and their clients.
But before that, why was there a need to change the POA laws?
Background of the POA Changes
With the prior POA regulations, third parties and other financial institutions complained about the law’s complexity. They deemed it practically enforceable due to its strict requirements in forming execution.
Because of that, new regulations were enacted to help simplify and facilitate the application. Not only that but also on the enforceability of a power of attorney.
TheNew Laws Ensures the Following Significant Changes
The new rules require substantial conformity with the statutory language. The prior law restricted exact wordings and could not apply to even simple spelling mistakes. However, the new rule allows the POA to use even if there are spelling, punctuation, or grammatical errors made, provided the essential details of both the agent and principal are well dictated.
Eliminates the Statutory Gift Rider (SGR)
Prior regulations, on the gift rider required the principal to follow a long process in making SGR. They had to provide notary acknowledgment and two witnesses to the principal’s signatures. However, the current POA rules help condense the previous form of SGR into a straight-forward layout that allows the agent to make gifts transactions changes on their behalf.
Provides Penalties for Unreasonable Refusal to Accept a Valid POA
Previously, it was common for financial institutions to refuse even valid POA. This was rampant because the law didn’t provide any punitive actions for unreasonable refusal of POA.
However, the new regulations provide punishable penalties for those firms and individuals found refusing to honor an adequately executed POA.
Shields Third Parties Acting In Good Faith
The new regulations create a safe harbor for third parties or recipients of a POA, primarily if they have acted in good faith and the document is later deemed invalid. However, it will only protect the recipient from any liability if;
- The POA contains a verifiable signature.
- The recipient had no actual knowledge that any part of the document was invalid or that their agents were abusing their authority.
Notary Execution Requirement
The New York revised regulations ensure explicit notary provisions to facilitate the enforceability of the power of attorney procedures.
It, therefore, outlines that; the principal’s name and details be typed and printed in eligible letters and the document dated and signed or initialed by the principal. The details must then be approved and verified by a notary or any public person with power to confirm the validity of the POA.
Besides the notary requirement, the new laws also allow two witnesses named in the document, who are not named in Bill of sale as the agents.
For more information on getting and filling the power of attorney document, you can reach us and get immediate assistance.