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Should you sign for your clients?

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04/27/2015 | Author: Editorial Staff

Suppose a client is unable to sign the documents at closing because he is out of town. Ideally, the client has a person he trusts to sign on his behalf. But what if the only person available is the REALTOR®? Can a licensee act with power of attorney when that licensee stands to benefit from the closing of the transaction? 

Yes. There is no TREC rule or statute that prohibits this from occurring. There are legal requirements, though, for properly using a power of attorney with real estate transactions. In fact, there are many lenders who will not accept a power of attorney at a closing. 

There may be no prohibition against this activity, but there is potential liability. You could be responsible or legally liable for transactions, mistakes, or negligence that you weren't even aware of. For that reason, choose carefully when and in what capacity to act with a power of attorney. 

If you do decide to act with a power of attorney for your client, here are some pointers that will ensure you limit risk for yourself and your brokerage. 

  • Make sure the power of attorney is in writing, signed by an adult, and names who has the authority to act on behalf of the client so that it's fully enforceable. 
  • Keep in mind that title insurance underwriters go beyond the state's statutory requirements, with even stricter guidelines for power of attorney usage. A real estate power of attorney is only valid if the original, notarized document is recorded in the real property records where the property is located. Additionally, it is prudent to have the document reviewed by the title agency or lawyer conducting your closing, as their approval is required before they will rely on it for transfer purposes. 
  • Try to limit the discretion available to you, the licensee. Make sure the language is used to complete a specific task or transaction only, with no additional permissions. The less discretion you have, the less exposure you will have to a claim that you exceeded your authority or that there was a conflict of interest. 

Originally published in the March 2015 issue of Texas REALTOR® magazine. Visit texasrealestate.com/magazine for more digital magazine content.

Categories: Legal
Tags: legal, magazine, texas realtor magazine, closing

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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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