THE POWER OF ATTORNEY

One situation which often causes a leasing office to come to a grinding halt occurs when a prospective resident fails to show up to sign the lease, and instead, a person who is not listed on the lease or the application shows up and announces that he has a power of attorney and will sign the lease. At that point, the leasing agent may call the property manager, who in turn may call the regional manager, and still there may be no consensus as to what the proper course of action should be. Issues involving the power of attorney, (hereinafter referred to as a “POA”) crop up during a resident’s tenancy and even after the term of the lease has expired. Therefore, it is important for property managers to have a basic understanding as to what a POA document is, and how to deal effectively in regard to this area of the law with past, present and future residents along with third parties. This article will help you obtain a basic understanding of the POA process. However, as with other legal issues which property managers must navigate through on a daily basis, it is important that you contact your attorney if there is any doubt on your part as to what you should be doing. Make sure that your attorney is accessible, as POA related issues frequently pop up unexpectedly and require quick direction from your attorney.

What Does the Legal Term “Power of Attorney” Mean?

A POA is a legal instrument authorized by law under which one person or entity grants authority to an entity or one or more individuals to make decisions and take actions on the grantor’s behalf. The authority that is granted will be contained in the body of the POA. The authority can encompass a wide variety of transactions, known as a General POA, or can be limited to just one use or purpose, known as a Limited POA. The person granting the authority is referred to as the “principal”. The individual who is receiving the authority for the conduct or transaction is called the “attorney in fact”. In some circumstances a financial institution may be the “attorney in fact”. Do not be fooled by this fancy name; if somebody tells you he is an “attorney in fact”, that in no way means he is a licensed attorney authorized to practice law. The attorney in fact is considered a fiduciary and is obligated to act responsibly, due to the “trust” bestowed upon him by the principal. The party with whom the attorney in fact conducts a transaction is known as the “third party”. That is the role that the property manager or management has in these kinds of situations.

Florida Statute 709.08 Durable Power of Attorney

Tim, the property manager, made an appointment to meet with three prospective residents, Lucy, Cindy and Dwayne. Lucy and Cindy appear at Tim’s office, but Dwayne is nowhere to be found. Instead, Pablo subsequently arrives at the office and tells Tim that Dwayne gave him a POA. Tim asks Pablo where Dwayne is. Pablo tells Tim that he had invited Dwayne to Pablo’s 18th birthday party last week. While at the party, Dwayne decided to give Pablo and Pablo’s brother, Tommy, a Durable POA, authorizing them to handle any real estate transactions for Dwayne. Pablo displays the Durable POA document to Tim, and it lists Pablo and Tommy as attorneys in fact. Tim is wondering whether Pablo, at just 18 years of age, is old enough to take part in this process. In fact he is suspicious that the POA arrangement exists in the first place. Tim is also perplexed because there are two people who were given POA rights by Dwayne. Finally, Tim has never heard the term “Durable” used in conjunction with the POA process, and so this is further adding to his confusion. Florida Statute 709.08 sets forth the law regarding Durable POA documents in Florida drafted after October 1, 1995. This statute authorizes the attorney in fact to handle real estate transactions. In fact, it authorizes the attorney in fact to sell the house of the principal! Section 709.08 (1) states that a durable power of attorney is a written power by which a principal designates another as the principal’s attorney in fact. The section further adds that with the correct wording, the Durable POA can survive the subsequent incapacity on the part of the principal.

Are the Property Manager’s Concerns Addressed by the Statute?

Tim‘s concern regarding Pablo’s age is addressed by Section 709.08(2) which sets 18 as the minimum age to serve as an attorney in fact. Since Pablo is 18, he is old enough to be to be an attorney in fact. It turns out that Tim was right to have concern over there being two attorneys in fact. Section 709.08 (9) (a) requires that both attorneys in fact concur with respect to any exercise of the Durable POA unless the Durable POA document provides otherwise. Therefore, Tommy would need to sign the lease along with Pablo in order to bind Dwayne to the contractual terms of the lease. As mentioned, Tim is clearly skeptical that Pablo is the attorney in fact. The statute authorizes him to request that the attorney in fact sign a notarized affidavit attesting to (but not limited to) the following: that he is indeed the attorney in fact named in the Durable POA executed by the principal, the location of where the principal is domiciled, that the Durable POA is currently exercisable by the attorney in fact, and to the best of the attorney in fact’s knowledge, that the principal is not deceased, and that there has been no revocation of the POA by the principal or any outside judicial authority. If the above affidavit is provided to Tim, and both Pablo and Tommy are willing to sign the lease on behalf of Dwayne, then Tim better think twice before he refuses to allow the attorneys in fact to assert their powers. Section 709.08 (11) states that the unreasonable refusal of a third party to allow an attorney in fact to act pursuant to the power could subject the third party to liability for attorney’s fees and costs if the third party is sued and loses in court. That dollar amount could be quiet substantial. It is best to call your attorney if there is any doubt in how you should proceed before refusing to allow the attorney in fact to act. As you know, litigation can be very costly! You should also be aware that Florida recognizes the deployment-contingent POA. Section 709.11 of the Florida Statutes requires a property manager to accept a valid power of attorney that is signed in advance by the principal which takes effect once the principal is deployed by the military.

Common Mistake Scenario #1 (Improperly signed lease)

Marta, the property manager, is under the belief that she is leasing a one bedroom apartment to Chester Turnkey. Chester did not sign the lease. Robert Jones executed the lease on behalf of Chester instead. It turns out Robert was given a Durable POA by Chester. Robert showed the paperwork to Marta, and she sincerely believed the POA was valid. Marta handed the lease to Robert, who “signed” the lease by simply writing Chester’s name. Big mistake! The written lease was executed incorrectly. If Chester did move into the apartment, then there may be other legal grounds to evict him. However, if there is some unknown third party that moved into the unit other than Chester, there is no way Chester would be held responsible for the lease, and a more complicated legal procedure than an eviction may be required. Life would have been a whole lot easier for Marta had she made sure that Robert signed the lease properly as displayed below: The principal’s name (Chester Turnkey) By__________ Robert Jones Attorney-in-fact

Common Mistake Scenario #2 (Third party access)

It is very common for a property manager to receive paperwork from a resident, who for one reason or another, is located out of town. The resident will grant a POA to a friend to help manage his personal affairs. Why do you need to be careful in this type of situation? Massive liability for the property manager and/or Owner can follow if you allow the attorney in fact into the resident’s unit without proper documentation. A good property manager will read the POA that is presented to her with caution, and if need be, check with her attorney. It is very easy for the property manager who is in a hurry to make errors. For example, the POA form is often a pre-printed form which lists a number of different potential powers to be checked off. If the specific power governing disposition of personal property is not checked off, and you let the attorney in fact into the unit, you can be sure that the resident will sue you if anything real or imaginary is missing!