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New Uniform Power of Attorney Act in Effect
(Procedures to limit liability)
Introduction:
On April 2, 2007 Governor Richardson signed the Uniform Power Of Attorney Act. For all practical purposes the Act will be fully effective as of July 1, 2007.
The Act is intended to protect persons (including financial institutions) that accept and rely upon acknowledged powers of attorney. At the same time, the Act is intended to encourage financial institutions and others to accept acknowledged powers of attorney.
The Act provides for liability (attorney fees etc.) for a refusal to accept an acknowledged statutory form power of attorney. However, the Act provides a procedural solution that in most cases should protect financial institutions, so long as they implement a procedure (discussed below) to obtain a certification as to the validity of each power of attorney presented to the institution.
Brief Overview of the Power of Attorney Act:
Section 102. Definitions. The word "person" means and includes individuals, corporations, and all other entities, including but not limited to financial institutions.
Section 105. Presumption. The signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public.
Section 109. Effective date. A power of attorney is effective when signed by the principal unless the power of attorney specifically provides that it becomes effective at a future date or upon the occurrence of a future event.
Section 110. Termination. Among other things, a power of attorney terminates when the principal dies.
Section 119. Acceptance and Reliance.
A person that in good faith accepts an acknowledged power of attorney without actual knowledge that the signature is not genuine may rely upon the Section 105 presumption that the signature is genuine.
Additionally, a person that in good faith accepts an acknowledged power of attorney without actual knowledge that the power of attorney is void, invalid, or terminated, or that the agent is exceeding or improperly exercising his or her authority, may rely upon the power of attorney as if the power of attorney were genuine, valid, still in effect, and as if the agent were not exceeding or improperly exercising his or her authority.
Section 120. Acceptance and liability for refusal to accept power of attorney.
A person shall either accept an acknowledged statutory form power of attorney, or request a certification, translation, or opinion of counsel no later than seven (7) business days after presentation of the power of attorney for acceptance.
If a person requests a certification, translation, or opinion of counsel the person shall accept the statutory form power of attorney no later than five (5) business days after receipt of the certification, translation, or opinion of counsel.
A person may not require an additional or different form of power of attorney for authority granted in a statutory form power of attorney presented to the person.
A person that refuses to accept an acknowledged statutory form power of attorney is subject to liability for reasonable attorney fees and costs incurred in any court action that mandates acceptance of a refused power of attorney.
Section 301. Statutory Form Power Of Attorney. A document substantially in the form shown on the New Mexico Statutory Form Power of Attorney attached hereto may be used to create a statutory form power of attorney.
Section 302. Agent’s Certification of validity of power of attorney. A document substantially in the form shown on the Agent's Certification attached hereto may be used by a person to obtain an acknowledged certification by an agent that the principal is alive, that the principal has not revoked the power of attorney, that the agent's authority has not been terminated, and that if the power of attorney was drafted to become effective upon the happening of an event, the event has occurred. (Please note that paragraphs 4 and 5 of the Agent's Certification form were added by the author of this memo as "other relevant statements" authorized by the Act).
Recommended procedure to deal with powers of attorney:
Nothing that a financial institution can do can absolutely guarantee that the institution will not be sued for accepting an invalid power of attorney or for refusing to accept a valid power of attorney. However, if the employees of a financial institution follow the following basic procedures the potential for liability can be minimized:
1. Read the power of attorney presented to you, ensure that it appears to be properly notarized, and verify that it grants authority to the agent to take the action that the agent is asking you to take. You do not need to verify that the power of attorney is substantially in the form of the statutory form power of attorney.
2. Ask for identification and verify that the name of the person on the identification is the same as the person named as the agent in the power of attorney presented to you. Make and keep a photocopy of the identification.
3. Ask the agent to fill out an Agent's Certification on a form that you provide, have the agent sign the Certification, and have their signature notarized. Keep the original signed and notarized Certification, and keep a copy of the power of attorney. (a suggested form is attached hereto).
4. If you in good faith believe that the power of attorney presented to you is not valid or that the purported agent does not have the authority to perform the act requested, you should promptly consult with your supervisor, who should consult with your institution's counsel if there are any remaining questions about the matter. You have five business days after receipt of an Agent's Certification to accept the power of attorney. If your institution decides not to accept a particular power of attorney it is recommended that within said five-day period your institution or its counsel provide a written explanation as to the reason for your refusal to accept it.
Mr. Carlin has been an attorney with the Moses Law Firm in Albuquerque, New Mexico, since 1978. His practice includes litigation and problem resolution in the areas of creditors' rights in bankruptcy, business, commercial, and real estate law. Phone: (505) 843-9440; e-mail: vic@moseslaw.com
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