Bulletin: SC000009

Dear Associates:

Frequently, a power of attorney is used to facilitate a real estate transaction. Its use is sometimes necessary, but it offers an opportunity for fraud and presents the title insurer with greater than ordinary risk.

Before closing a transaction on the basis of a power of attorney, the agent or approved attorney should consider the following:

1. The reason for the necessity of the power of attorney. Why can the principal not act on his own accord?

2. Does the instrument creating the power authorize the transaction in clear and unequivocal language?

a. Preferably, the power of attorney will be specific to the present transaction. If not, consider whether the principal's assent can be corroborated from other documents executed by the principal, such as a sales contract or a loan agreement.

b. Is the instrument creating the power executed with ?equal dignity? of the instrument which is proposed to be executed by the attorney-in-fact? (That is, are there two witnesses and a proper probate or acknowledgment?)

c. If the existing power of attorney document is inadequate, rather than sending a new instrument, why not have the principal personally execute the documents, or at least the deed and/or mortgage?

3. The power of attorney document must be recorded prior to the instrument to be executed by the attorney-in-fact.

4. The agent should inquire as to whether the power has been revoked by incompetence (unless the POA is durable) death, or by revocation by the principal. The agent should contact the principal by telephone the day of the closing.

5. A fiduciary, such as a personal representative of an estate or a trustee, may not delegate the exercise of fiduciary powers to others through a power of attorney.

The agent should contact the District Office with any questions as to the sufficiency of the instrument creating the power or any other questions regarding the transaction.

For further information, please see Section 15.52 of the Underwriting Manual.