The Applicability of Foreign Powers of Attorney to Real Property Transactions in Florida
Under the Florida Power of Attorney Act, powers of attorney (POAs) fall into one of three broad categories: 1) POAs executed in Florida or according to Florida law before October 1, 2011; 2) POAs executed in Florida or according to Florida law after October 1, 2011; and 3) POAs executed in another state and not in accordance with the laws of Florida.1
While this third category, foreign POAs, may seem of little concern at first glance, many Florida practitioners have out-of-state clients who own rental or investment property in Florida. Such clients often manage the property through a local management group, making trips to the state rare. Given this limited interaction with the state, these clients are likely to have estate plans drafted in the state where they reside. Many attorneys also have seasonal or “snowbird” clients, i.e., those who spend the winter months in Florida while maintaining another residence elsewhere. Given that most snowbirds are of retirement age, it is common for them to come to Florida with an estate plan in place, including POAs. Such clients may need legal representation in a matter in which both a property interest and a foreign power of attorney come into play.
This article focuses on the applicability of foreign POAs to real property transactions. A detailed understanding of how Florida law approaches foreign POAs is beneficial to practitioners, particularly those with out-of-state or seasonal clients.2 This article will also outline some issues regarding the applicability of foreign POAs that may require further development — either by the courts or legislature — to better integrate the use of foreign POAs in the state.
The Act: An Overview
In June 2011, Gov. Rick Scott signed a senate bill into law that significantly revised F.S. Ch. 709 — the chapter governing POAs.3 The revised chapter is divided into two parts. Part I governs powers of appointment, while Part II, known as the Florida Power of Attorney Act, governs powers of attorney.4 Effective October 1, 2011,5 the Florida Power of Attorney Act was intended to bring Florida’s POA laws into closer conformity with the Uniform Power of Attorney Act,6 a model act created by the Uniform Law Commission to address and balance abuse of powers by agents while promoting increased flexibility in the use of POAs.7 An example of this flexibility, which appears in the act, is the recognition of foreign POAs, that is, POAs executed in “another state”8 and not in accordance with Florida’s laws governing execution of POAs.
Just Draft a New One?
Before delving further into the topic, it may be helpful to address a concern some readers may have at the outset of this article. That is, rather than going through the effort to make sure a client’s foreign POA is valid in Florida, or running the risk that it may not apply to certain transactions, why not just draft a new POA in accordance with Florida law? When the option exists, it is usually the preferable course of action. However, there are times when executing a new POA is not an option.
For example, if the principal has already become incapacitated, making the execution of a new POA impossible. What if the principal is in a foreign country with insufficient (or at least untimely) methods of communication? Or, what if the principal refuses to sign a new POA? The principal may feel that since he or she already paid for one POA, he or she shouldn’t incur the costs of a new one. Simply put, there are times when it is impossible to draft a new POA and the foreign POA must suffice, to the extent it can.
Is the Foreign Power of Attorney Valid?
The first matter a practitioner should resolve when confronted with a foreign POA is to determine whether the POA will be recognized and valid under Florida law. Foreign POAs will be valid under Florida law as long as they satisfy certain requirements under the act.9 The simplest of these requirements is that the foreign POA will be valid under Florida law if it complies with the Florida execution requirements under the act,10 that is, the foreign POA is signed by two witnesses and notarized.11 If the foreign POA does not meet this requirement, it will still be valid under Florida law if the foreign POA and its execution complies with the laws of the state of execution at the time it was executed.12 New York’s POA laws provide an excellent illustration of the application of this requirement.
As to the first part of this requirement, that the foreign POA and its execution complies with the laws of the state of execution, New York offers its citizens the option of using a statutory POA (a state-recognized POA form provided in statute), which maybe comprised of up to two separate instruments. The first form is the New York statutory POA itself.13 This statutory POA prohibits attorneys-in-fact from making any gifts (including those affecting interest in the principal’s property), the total annual value of which exceeds $500. If a principal wishes to give his or her agent broader discretion, the principal may only do so by completing an additional instrument, the statutory gifts rider.14 This dual document approach greatly differs from Florida’s approach to POAs.
As to the second part of this validity requirement, that the foreign POA and its execution complies with the foreign state’s laws at the time of execution, the New York statutory POA form only need be signed by the principal and notarized; no witness signatures are required, that is unless the principal also decides to include the statutory gifts rider, which then requires the signatures of two witnesses.15 Furthermore, not only do the New York statutory POA and the statutory gifts rider have different execution requirements, both documents must be executed at the same time if the rider is to be valid.16 New York did not enact the statutory gift rider until late 2009, making it possible for differences to appear in a recent statutory POA from New York compared to one from just a few years ago. New York’s distinct execution requirements emphasize the importance of reviewing the laws of the foreign state at the date of execution.
Once it is determined that a foreign POA is valid in Florida, the practitioner should be aware that with respect to actions to be exercised by the agent in Florida, the act does not automatically give the agent complete authority to perform every transaction permitted by the language in the foreign POA. This is especially true with regard to transactions involving Florida real property.17 There is also some uncertainty in this area of the law regarding foreign POAs and real property. With the representation of out-of-state or seasonal clients being so frequently tied to Florida real property, an understanding of such limitations is of particular importance.
Deed Execution Requirements?
One misconception concerning foreign POAs that can arise is that in order to affect a transfer of an interest in Florida real property, a foreign POA must comply with Florida’s laws regarding the execution of deeds, that is, notarized and signed by two witnesses. However, close reading of the act and related statutes shows that a foreign POA’s compliance with Florida deed execution requirements is not required for an agent to affect interest in Florida real property. This misconception likely stems from an overly broad interpretation of the act as well as Florida homestead law (as will be discussed later in this article).
Section 709.2105 of the act outlines the execution requirements for Florida POAs. The act requires that Florida POAs be signed by at least two witnesses and be acknowledged before a notary public.18 Florida has long applied these execution requirements to deeds,19 so that these requirements are often referred to as “deed execution requirements.” However, the act does not extend these deed execution requirements to foreign POAs. Under the act, “[a] power of attorney executed in another state which does not comply with the execution requirements (i.e., two witnesses and acknowledgment) of this part (i.e., Part II of Ch. 709, the Florida Power of Attorney Act)20 is valid in this state” so long as it was valid in the state of execution, at the time of execution,21 as previously discussed.
Under the act (and unless the POA states otherwise), the agent generally needs only present a digital copy or photocopy of the POA22 in order to act on behalf of the principal, thus, eliminating the need to carry around the original POA (possibly risking loss or damage), or the need to keep certified copies on hand. However, the act (unlike the Uniform Power of Attorney Act23) notes that an original power of attorney “may be required for recording in official records” when the POA is “relied upon to affect the title to real property.”24 This is the only use of the phrase “real property” in the act.25 As such, some may also conclude that this provision requires that, pursuant to Florida recording laws, foreign POAs must comply with Florida deed execution requirements.
F.S. §696.03, titled, “When agreement executed by agent or attorney may be recorded,” states that “no authority for the execution of instruments by an agent or attorney in fact shall be accepted which is not executed in the manner provided by law for the execution of deeds.”26 So, as the argument goes, in order for an agent to rely on a foreign POA to affect title to real property in Florida, the original POA (or a certified copy) must be recorded,27 and to do so, the document must comply with Florida’s laws governing recordation,28 outlined in F.S. §695.26(1), which includes, inter alia,two witnesses and acknowledgment by a notary.
However, this section explicitly states that it is inapplicable to instruments executed, acknowledged, or proved outside of Florida.29 So while a Florida POA and any instruments affecting interest in real property in Florida made in reliance upon such should comply with this section, it is not requisite that foreign POAs do so.
It is uncertain whether the specific issue of using foreign POAs to effectuate Florida real property transactions was considered by the legislature when the act was written into law or whether the legislature intended a stricter standard for foreign POAs in such transactions. However, if such was indeed the case, the legislature would need to consider a statutory amendment to address such transactions.
Limitations on Foreign POAs Affecting Florida Property
While Florida deed execution requirements do not apply to foreign POAs relied upon to affect title to Florida real property, Florida law does limit foreign POAs in other ways. The remainder of this article discusses several of those limitations, particularly as they pertain to affecting title to real property in Florida.
While Florida permits the use of foreign POAs within the state, one area in which the law does not so easily yield is the constitutional homestead protection. In Florida, an agent may deed or mortgage the homestead property of an unmarried person, married person, or married couple only if the POA relied upon by the agent is “executed in the same manner as a deed,”30 that is, two witnesses and notarization. As mentioned previously, the frequent or perhaps overbroad application of this requirement may have contributed to a misconception that deed execution requirements apply to foreign POAs used in all Florida real property transactions. In the case of homestead property owned by a married person or by a married couple, i.e. as tenants by the entireties, an agent should also be aware that both spouses must sign the conveyance or mortgage; however, this too may be accomplished via POA, that is, the spouses may execute via their respective agent(s).31 Even if the out-of-state POA is valid under the Florida Power of Attorney Act, it may still be insufficient for certain real property transactions. It seems, therefore, that if homestead protection is indeed akin to a protective safe for property rights,32 Florida does not want a foreign state’s lesser execution requirements to become a tool for picking the lock.
The act requires all POAs, foreign or otherwise, to specify the powers permitted by the POA.33 Agents “may only exercise authority specifically granted to the agent in the power of attorney and any authority reasonably necessary to give effect to that express grant of specific authority.”34 General provisions in POAs, for example, “Agent may do all acts that [p]rincipal can do in his capacity,” are of no effect in Florida.35 A client wishing to rely on a general power in an otherwise valid foreign POA in order to make real property transactions should be advised to the contrary.
There is no bright line, however, as to the level of specificity required for a grant of power in a POA to be effective. Some guidance is available in the Uniform Title Standards for the Real Property, Probate and Trust Law Section of The Florida Bar.36 Standard 1.3 notes that the POA need not specifically describe the real property; rather, the language of the POA must “show such land to be within the principal’s intention in the granting of the power.”37 The standard also provides two examples of POA language conferring authority regarding real property. The first example depicts language lacking the requisite specificity, authorizing the agent “to generally act for me and in my name, place and stead, in any state and in relation to all matters, to do any and all things and to execute any and all instruments which I might or could do if personally present.”38 This is an excellent example of the general provisions prohibited under the act.39 The second shows sufficiently specific language, authorizing the agent to “sell and convey any and all land owned by me[.]”
However, these two examples mainly illustrate extremities — the first being very general, the second being quite specific — leaving an area of uncertainty in between. Furthermore, while the act limits an agent to powers specifically granted in the POA, as mentioned, the act also confers upon the agent the “authority reasonably necessary to give effect to that express grant of specific authority,”40 thus, permitting some discretional latitude, but again, how much? This is an issue not addressed in the act and yet to be taken up by Florida courts.
Consider states that have adopted statutory form POAs. At least 18 jurisdictions provide some form of statutorily recognized POAs.41 Statutory form POAs are considered by some jurisdictions to be a simpler alternative to common law POAs since the forms merely list the powers granted, and the powers are described in detail elsewhere in statute.42 Take Texas’ Statutory Durable General Power of Attorney for example. Located at §752.051 of the Texas Estate Code, the statutory form POA lists powers that the principal may initial next to in order to grant a power to his or her agent. The introduction to the statutory POA simply states that the powers granted therein are explained elsewhere in Texas’ Durable Power of Attorney Act. The first power listed in this form simply states “real property transaction.”43 However, when one reads §752.102 of the Texas Estate Code, where this brief power is explained, it becomes clear how specific and far-reaching this power is. The agent is empowered to:
sell, exchange, convey with or without covenants, quitclaim, release, surrender, mortgage, encumber, partition or consent to partitioning, subdivide, apply for zoning, rezoning, or other governmental permits, plat or consent to platting, develop, grant options concerning, lease or sublet, or otherwise dispose of an estate or interest in real property or a right incident to real property.44
This is just in regard to divesting a principal’s interest in real property. This statute contains seven additional subsections bestowing further powers on the agent as it relates to real property.
The length of this section alone is sufficient to illustrate a point regarding specificity. On its face, the previously stated statutory power to enact “real property transactions” may seem a bit vague. Does it include the ability to sell or convey outright? What about leasing the property or granting an easement? However, it would be difficult to draft a definition of “real property transaction” more specific than that quoted above. Yet, while this statutory POA states that the powers granted therein “are explained in the [Texas] Durable Power of Attorney Act,”45 such explanations do not appear as part of the POA itself. This raises the question of whether explanatory statutes or other documents not incorporated by reference should be considered when interpreting foreign statutory POAs, or whether review should be limited to the POA on its face?
The act only allows an agent to “exercise authority specifically granted to the agent in the power of attorney and any authority reasonably necessary to give effect to that express grant of specific authority.”46 Such language could be used to argue either position. The phrase “in the power of attorney” supports that the interpretation should be limited to the POA itself. But it is equally arguable that “and any authority reasonably necessary to give effect to that express grant of specific authority,” would encompass explanatory statutory provisions, but again a closer look says this additional authority applies only when the initial grated authority is “specific.”
The act makes it clear that the act, including the specificity requirement, applies to foreign POAs.47 However, the act provides no direct guidance as to the specificity necessary for a grant of authority in a POA. Without such, any further guidance on the matter will have to come from the courts. In a case involving a foreign POA, Florida courts may decide to look to case law from the foreign state or sections of its POA law to determine specificity — the act already directs that such be consulted when determining validity under the act. Or the courts may limit themselves to the Florida act and Florida cases concerning POA interpretation. As of the drafting of this article, no Florida appellate court has addressed the act’s specificity requirement. The act (not to mention Florida’s acceptance of foreign POAs) is still fairly new, so what exactly constitutes “specificity” and how such may apply to foreign POAs is an issue that may be developed in caselaw as time goes on, which the practitioner should monitor.
Recordation of the POA
Once it is determined that the out-of-state POA is both valid and permits real property transactions, simply executing and filing a deed pursuant to such a POA could be putting the cart before the horse. In Florida, any instrument conveying real property (or any interest therein) made pursuant to a power of attorney is ineffective against either creditors or subsequent purchasers for valuable consideration and without notice unless the POA is recorded before the creditor or subsequent purchaser’s rights accrue.48 While this is the statutory rule, and hence, the advisable order to follow, Standard 16.4 of the Uniform Title Standards for the Real Property, Probate and Trust Law Section suggests that should the order be reversed, and the deed be recorded before the POA, marketable title is still conveyed (presuming no intervening creditors and that the POA was in existence prior to the conveyance or contained words of ratification).49 However, the careful practitioner should minimize unnecessary risk by recording the POA first.
Florida attorneys should be aware of how Florida law interacts with foreign POAs for the purposes of effectuating in-state transactions, particularly in the area of real property. This article presents guidelines and considerations to help the Florida practitioner presented with a foreign POA. This article also identifies issues that, given the relative newness of the act, could develop over time and should be monitored by the careful practitioner.
1 Fla. Stat. §§709.2106(1)-(3) (2013).
2 Note that as of the drafting of the paper, only one appellate case even acknowledges the use of foreign POAs in Florida, Deutsche Bank Nat. Trust Co. v. Prevratil, 120 So. 3d 573, 576 (Fla. 2d DCA 2013). Current caselaw should always be considered.
3 Mildred Gomez, Florida Enacts New Powers of Attorney Statute, ABA Memorandum, available at http://www.americanbar.org/content/dam/aba/publications/rpte_ereport/2011/2011_aba_rpte_ereport_04_te_gomez.authcheckdam.pdf.
4 Fla. Stat. §709.2201 (2013).
5 See Fla. Stat. §§709.2106(1)-(2) (2013). See also Mildred Gomez, Florida Enacts New Powers of Attorney Statute, ABA Memorandum.
6 Mildred Gomez, Florida Enacts New Powers of Attorney Statute, ABA Memorandum.
7 National Conference of Commissioners on Uniform State Law, Uniform Power of Attorney Act 2 (July 2006), available at http://www.uniformlaws.org/shared/docs/power%20of%20attorney/upoaa_final_may08.pdf.
8 Fla. Stat. §709.2102(2) (“[A] state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.”).
9 Fla. Stat. §709.2402(2).
10 Fla. Stat. §709.2106(3).
11 Fla. Stat. §709.2105(2).
12 Fla. Stat. §709.2106(3).
13 N.Y. Gen. Oblig. Law §5-1513.
14 N.Y. Gen. Oblig. Law §5-1514; see also N.Y. Gen. Oblig. Law §5-1513(g)-(h).
15 N.Y. Gen. Oblig. Law §5-1514.
16 N.Y. Gen. Oblig. Law §5-1513(h).
17 The Florida Bar, Florida Power of Attorney Pamphlet, available at /tfb/TFBConsum.nsf/0a92a6dc28e76ae58525700a005d0d53/ab36277c4562e98885256b2f006c5ad6!OpenDocument#ABOUT%20THE%20POWER%20OF%20ATTORNEY (“There are additional requirements for real estate transaction in Florida….”).
18 Fla. Stat. §709.2105(2).
19 Fla. Stat. §§695.26(1)(a)-(f).
20 See Fla. Stat. §709.2101.
21 Fla. Stat. §709.2106(3).
22 Fla. Stat. §709.2106(5).
23 Compare Uniform POA Act, note 8 at 13.
24 Fla. Stat. §709.2106(5).
25 Aside from this single instance, and two sections referencing homestead (Fla. Stat. §709.2119(6), §709.2201(b)) the act’s definition of “property”
extends to both real and personal property. See Fla. Stat. §709.2102(12). Thereby, rather than distinguishing between real and personal property, and outlining specifications for each, the act lumps them together.
26 Fla. Stat. §696.03.
27 See Fla. Stat. §28.222(3) (specifying documents to be recorded by the clerk of court).
28 Standard 1.1
29 Fla. Stat. §695.26(3).
30 Fla. Stat. §689.111(1).
32 In re Reinhard, 377 B.R. 315, 319 (Bankr. N.D. Fla. 2007) (“[H]omestead status in Florida is not properly conceptualized as a stick in the bundle; rather, it is a protective safe in which the bundle is put.”).
33 Fla. Stat. §709.2201(1).
36 The Florida Bar Real Property, Probate and Trust Law Section, Uniform Title Standards, available at http://www.rpptl.org/index.php?option=com_comprofiler&task=pluginclass&plugin=cbgroupjive&action=groups&func=show&cat=5&grp=86&Itemid=225. See also John L. Soileau & Raymond Carrero, Authority to Convey and Execution of Deeds §F, Conveyance by Attorney-in-Fact (2013).
37 The Florida Bar Real Property, Probate and Trust Law Section, Uniform Title Standards at 1.3.
39 Fla. Stat. §709.2201(1).
41 National Conference of Commissioners on Uniform State Law, Uniform Power of Attorney Act at 2, available at http://www.uniformlaws.org/shared/docs/power%20of%20attorney/upoaa_final_may08.pdf.
42 See, e.g., The New York State Law Revision Commission Report on Powers of Attorney at 1 (2012), available at http://www.lawrevision.state.ny.us/PowersofAttorneyFinalReportJanuary12012.pdf.
43 Tex. Est. Code §752.051.
44 Tex. Est. Code §752.102.
45 Tex. Est. Code §752.051.
46 Fla. Stat. §709.2201(1).
47 Fla. Stat. §709.2103.
48 Fla. Stat. §695.1(1).
49 The Florida Bar Real Property, Probate and Trust Law Section, Uniform Title Standards 16.4, available at http://www.rpptl.org/index.php?option=com_comprofiler&task=pluginclass&plugin=cbgroupjive&action=groups&func=show&cat=5&grp=86&Itemid=225.
Andrew Bennett is the general counsel for Solaris Foundation, Inc., a Florida not-for-profit corporation operating skilled nursing and assisted living facilities throughout Florida. He is a graduate of the Ave Maria School of Law and a member of The Florida Bar.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Michael J. Gelfand, chair, and Jeff Goethe and Doug Christy, editors.