Powers-of Attorney

In the immortal words of William Shakespeare, “To record or not to record.” Okay. . .so maybe that’s not how it went, but it’s still worthy of a discussion as it relates to Powers of Attorney.  I am going to make a number of references to NCGS 47-28 so, we might as well be looking at it together.  Here it is:

§ 47-28. Powers of attorney.

(a) Recording required for powers of attorney affecting real property:
(1) Before any transfer of real property executed by an attorney-in-fact empowered by a power of attorney governed by Article 1, Article 2, or Article 2A of Chapter 32A of the General Statutes, the power of attorney or a certified copy of the power of attorney shall be registered in the office of the register of deeds of the county in which the principal is domiciled or where the real property lies. If the principal is not a resident of North Carolina, the power of attorney or a certified copy of the power of attorney may be recorded in any county in the State wherein the principal owns real property or has a significant business reason for registering in the county.

(2) If the real property lies in more than one county or in a county other than where the principal is domiciled, the power of attorney or a certified copy of the power of attorney shall be registered in the office of the register of deeds in one of the counties, and the instrument of transfer shall refer to the recordation specifically by reference to the book, page, and county where recorded.

(3) Any instrument subject to the provisions of G.S. 47-17.2, 47-18, or 47-20 and signed by an attorney-in-fact and recorded in a county other than the county where a power of attorney is recorded in this State shall include the recording information, including book, page, and county for the power of attorney.

(4) The failure to comply with the provisions of this subsection shall not affect the sufficiency, validity, or enforceability of the instrument but shall constitute an infraction.

(b) If the instrument of conveyance is recorded prior to the registration of the power of attorney or a certified copy of the power of attorney pursuant to subsection (a) of this section, the power of attorney or a certified copy of the power of attorney may be registered in the office of the register of deeds as provided in subsection (a) of this section thereafter provided that the attorney-in-fact was empowered at the time of the original conveyance. Notwithstanding the provisions of subsection (a) of this section, no conveyance shall be rendered invalid by the recordation of the power of attorney or a certified copy of the power of attorney after the instrument of conveyance, and the registration shall relate back to the date and time of registration of the instrument of conveyance.

(c) The provisions of subsection (a) of this section shall apply to all real property transfers utilizing an authority under any power of attorney whether made on or after April 1, 2013, and the provisions of subsection (b) of this section shall apply to all real property transfers utilizing an authority under any power of attorney whether made before, on, or after April 1, 2013. (Code, s. 1249; 1899, c. 235, s. 15; Rev., s. 987; C.S., s. 3317; 2013-204, s. 1.15.)

This statute was amended in 2013 and the first sentence of the statute provides the biggest clue for the reasons behind the law’s revision.  Prior to this amendment, Powers of Attorney were not required to be recorded.  The previous statute indicated that powers of attorney “may” be recorded.  So, the recording of Powers of Attorney are now compulsory by statute.  Likely, the biggest motivator for the change was the proliferation of properties being sold after foreclosure in a process we have come to term as REO’s.  A large volume of these properties were being sold by the various lenders’ servicers utilizing Powers of Attorney.  The Powers of Attorney were not always recorded, and when they were, they were occasionally recorded in Counties that had no real nexus to the transaction.  The statute sought to provide some relief for practitioners who were searching title after the REO transaction and trying to determine whether the conveyance was made with the proper authority.

So. . .the first thing the statute requires is recordation.  Where, you ask? The statute indicates that the Power of Attorney shall be recorded where “the principal is domiciled” or “where the real property lies.” If the principal is not a resident of North Carolina, the Power of Attorney, or a certified copy of the Power of Attorney, may be recorded in any county in the State wherein “the principal owns real property” or “has a significant business reason for registering in the county.”   That leaves us with four options:

(1)    The County where the Principle resides;
(2)    The County where the property that is the subject of the Power of Attorney is located;
(3)    Any County in which the Principle owns real property;
(4)    Any County in which the Principle has “significant business reasons” for registering there.

The second significant thing the statute does is it requires that any instrument that relies on the Power of Attorney for execution must indicate the book, page and County where the Power of Attorney is recorded.  This information can be contained in the document itself or in the Notary Acknowledgment.

The third significant thing the statute does is it allows for the Power of attorney upon which the instrument relies for authority to be recorded after the instrument without impacting the validity of the instrument.  Provided however, that the Power of Attorney indicates on its face that the Attorney-in-fact had the actual authority to execute the instrument on the date in question.   Pursuant to this statute, if you forgot to record the Power of Attorney with the Deed after the closing, you could record it later and the instrument would be valid as long as the Power of Attorney indicated that the Attorney-in-Fact had the authority on the date of the execution of the instrument.

Recently, we have had a number of situations where the instrument that was executed by the Attorney-in-Fact failed to identify the book, page and County where the Power of Attorney was recorded.  In those instances, we have suggested a Corrective Notary Acknowledgment including that information.  Our rationale in so doing is that it is often easier to correct the notary’s acknowledgments (which may be a person in your office) than it is to obtain a new Deed from the Seller.

sb