An Essential Tool for Overseas Home Buyers and Sellers
One of the first things my overseas clients ask me when considering buying or seller is this: “We’re not going to be able to get back to Northern Virginia to sign closing documents – what do we do?” While it’s important that they’re thinking ahead, they don’t need to worry! Thanks to a legal instrument called a “Power of Attorney” or “POA”, home buyers and sellers not physically present at the time of closing may execute their purchase or sale documents through a third-party signatory via a POA.
The POA has been a critical tool in 2020, especially, due to travel restrictions spurred by Covid-19. But even before that, the majority of my overseas clients would use this instrument in order to avoid having to travel across the miles to the get to the closing table. In the last several years, I’ve had no fewer than 30 closings where it’s been the “attorney-in-fact” designated by the POA who signs a client’s closing documents. Though I miss being able to see my clients’ faces and expressions of excitement when they’re handed or handing off keys, I’m also relieved that this option exists to enable their closing in absentia.
Here, I’m going to walk through the nuts and bolts of the POA from its preparation through to the role an attorney-in-fact plays in a closing.
How do I get a Power of Attorney?
Once a client is under contract, I’ll alert the title company and client’s lender (if buying) to the need for a POA. Many clients instinctively – and logically – would prefer that their realtor, a friend or a family member sign closing documents on their behalf. Though it would be convenient, realtors are not permitted to serve as a client’s “attorney-in-fact” (a fancy word for a surrogate or proxy). They’re too involved in the transaction. Similarly, a representative from the title company is also too close to the transaction to serve in that role.
Friends and family seem appropriate on the surface. However, it is often asking a lot of them to travel some distance themselves to get to a closing here in Northern Virginia, typically in the morning hours. Also, they’re not always prepared for the hand gymnastics involved! Imagine signing “XYZ Name, as Attorney-In-Fact for XYZ Buyer Name” 50+ places in a document. It can be draining. More than that though – it can be risky to rely on a friend or family member. Their schedules can change. They may not be able to travel the way they planned. A pandemic may hit (witness 2020!).
Rather than risk not closing as a result (and losing your earnest money deposit if the closing can’t be pushed back), it’s safer to designate an actual attorney to serve as your attorney-in-fact. Most title companies have a relationship with an attorney who is experienced in this area. The cost for this service will range between $100-$300. In my opinion, that’s money well-spent for peace of mind and the accountability that will come with an attorney signing closing documents on your behalf.
Once I have the POA, what do I do?
The title company typically emails the forms of POA to my clients after it obtains approval from my client’s lender. My client then needs to sign and notarize the POA and return an original signed/notarized POA document to the title company. This sounds easy enough, right? Not necessarily when you’re in a Covid-19 world. And not necessarily when you’re living in more far flung places in the world. In the best-case scenario, a client will bring printed out copies of their POAs to a US Embassy or other location with a notary, get the original(s) notarized and return the signed/notarized documents to the title company via overnight/express mail.
In the current Covid-19 scenario, with lockdowns and other movement limitations, it may not be possible to get to a physical notary public in front of whom to sign a hard copy of the POA. This is where technology and ingenuity come into play! Thanks to web-based platforms like NotaryCam and others, it may be possible (subject to lender approval) for a client to “e-notarize” their POAs in lieu of an in-person notarization. All a client has to do is log-in at a scheduled time and an e-notary will oversee their electronic signatures of the POAs. If a lender won’t allow e-notarization, a possible work-around is a Zoom session with a title company notary public staff member who watches via Zoom as a client signs the POAs. Once the signed original POAs are returned to the title company, that notary public can then notarize the original document. Again, this is subject to lender approval.
A side note here is that for clients living in locales without reliable overnight/express mail, it’s important to focus on the POA process early in the transaction. They need to ensure the original POA is in the hands of the title company well before their closing date. Just because FedEx says they overnight mail doesn’t make it so. Build in a cushion of extra days. Because of this issue, I always raise the POA concern at the outset of a transaction. And I make sure – or I encourage my client to make sure – that the lender has a clear process and established guidelines for how a client may get their POA finalized well before the closing date.
What does the Attorney-in-Fact do?
On a client’s closing date, their attorney-in-fact, as designated by their POAs, is teed up and ready to sign a client’s closing documents. Those documents include lender disclosure forms as well as certain loan and tax documents. Their role is not a substantive one though the function they serve is critical. They are literally a hand and a pen – there to satisfy the lender “wet ink” requirement when it comes to closing documents. They’ll sign in their capacity as a client’s “Attorney-in-Fact” and then transmit the package of signed documents to the title company.
Given the non-substantive role they play, it’s important that my clients review the closing document package in advance of their closing date. That way they know what their attorney-in-fact is actually signing. In an ideal world, a client would receive that package days in advance. That’s not what happens in practice. Generally, a client will receive the package of loan documents the day or night before their closing.
If you’re thinking of buying or selling from overseas and would like to learn more about the process, please be in touch!