By Julia Patterson Forrester

Powers of attorney are often used in real estate transactions for the convenience of parties who may be traveling or otherwise unavailable on the date of the closing of a transaction. In other situations, an agent may be acting under a durable power of attorney on behalf of an elderly or incapacitated principal. A durable power of attorney is one that is intended to continue in effect despite the principal’s incapacity.

As part of an estate plan, lawyers often recommend that a client execute a durable power of attorney to provide a plan for the possibility of later incapacity. The client may execute a durable power of attorney granting authority to an agent, often the client’s adult child, to act for the client in the event that the client later becomes incapacitated. The reason is to avoid an expensive guardianship proceeding. However, financial institutions and others have often refused to accept powers of attorney or to deal with an agent, thus necessitating a guardianship proceeding.

In 2006 the National Conference of Commissioners on Uniform State Laws approved and recommended the Uniform Power of Attorney Act, replacing the original Uniform Durable Power of Attorney Act. The new Act was designed to address the divergence of various states from the original act as well as problems identified by a survey of attorneys practicing in the area, including the problem of parties refusing to accept powers of attorney. The Texas Legislature recently adopted amendments to the Texas Durable Power of Attorney Act based on the Uniform Power of Attorney Act. The legislation was sponsored by the State Bar of Texas and originated in the Real Estate, Probate, and Trust Law Section (REPTL) of the State Bar.

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Recommended Citation
Julia Patterson Forrester, Rethinking Powers of Attorney in Real Estate Transactions, 71 SMU L. Rev. 369 (2018)