It is often necessary and convenient for a deed to be signed by someone acting under a power of attorney for another person. Ordinarily this presents no problem. However, much to the dismay of many title attorneys, some deeds executed under a power of attorney are invalid to pass title.
In Chapter 32A of the North Carolina General Statutes (NCGS) the legislature has attempted to address the issue of gifts to third parties under power of attorney and gifts to the attorney in fact. Under NCGS 32A-14.1(a), an attorney in fact who is generally the power to “do, execute, or perform any act that the principal might or could do” has the power to make gifts recognized under the Internal Revenue Code. However, under NCGS 32A-14(c) the power to make gifts to the attorney in fact is prohibited, unless expressly authorized in the power of attorney.
In other words, in common cases such as where a son or daughter, using his or her parent’s power of attorney, conveys the parent’s home as a gift (without monetary consideration), this deed may be invalid unless the power of attorney document contains language allowing gifts of property. Therefore, where a gift deed is signed by a person acting under a power of attorney and there is no authority under the power of attorney to make gifts, the deed will be at least “voidable” and even perhaps “void”.
Since children have often used their parent’s power of attorney to convey property by gift deed, there is now an important issue regarding title to such gift deeds. Often these gift deeds were used as part of an estate planning process where homes of older individuals with failing health were conveyed to the children under power of attorney. It is important to examine each power of attorney document to insure that authority exists under the document to execute gift deeds.
If you have concerns regarding the use of a power of attorney in your real estate transaction, you should contact a real estate attorney. The real estate attorneys at Ferguson, Hayes, Hawkins & DeMay, PLLC are experienced with powers of attorney and are willing to answer all of your questions.
Ryan C. Hawkins is a real estate attorney in Cabarrus County and a partner at Ferguson, Hayes, Hawkins & DeMay, PLLC. Ryan is also a member of the Real Property Section of the North Carolina Bar Association.