Power of Attorney browsing by tag


Land Records / Sham Recordings

Monday, December 13th, 2010

Who’s responsible for public records?

Amador County lies west of the Sierra Nevada mountains, in California’s historic Gold Rush territory.

Here in the small town of Ione, Jewel Jackson owned two rental homes.

One of Ms. Jackson's rentals

In March 2007, while she was living in Texas, Ms. Jackson’s brother Willie B. Norton determined to take control of her properties without her knowledge. To this end, Norton crafted a power of attorney purporting to appoint himself as Ms. Jackson’s attorney in fact to conduct real estate transactions on her behalf.

This was amateur hour. Norton alone signed the power of attorney form, before getting it notarized and recorded. Then he signed two quitclaim deeds transfering the properties to himself, and likewise had them notarized and recorded. When the paperwork was done, he evicted Ms. Jackson’s tenants.

Crime as inartful as this did not fool the authorities. Norton was prosecuted, and he pleaded guilty.

In the meantime, Ms. Jackson’s loss of rental income caused her to miss mortgage payments and the properties were lost to foreclosure.

Amador County Courthouse, at Jackson, California

So it happened that Ms. Jackson sued the County for negligently recording the sham documents. She argued the power of attorney was obviously bogus, since it wasn’t signed by the person supposedly granting the power. As such, it should not have been accepted by the recorder’s office and should not have appeared in the land records.

In its defense, the County said the documents were “recordable,” since they were on required sized paper (81/2 x 11), were legible, and were notarized.

The trial court agreed with the County, and Ms. Jackson appealed.

The Court of Appeals also sided with the County, saying the recorder was, in fact, legally required to record these documents because they were in proper format. Likewise, the Court said, the recorder is not responsible for legal sufficiency of recorded documents, and to hold otherwise “would place a county recorder’s office in the untenable position of requiring its employees to in effect practice law.”

Moral: Aside from the limited protection of notary laws, no one really vouches for validity of what gets into public land records.

Title insurance covers a multitude of risks for owners and lenders, and policies offered in some markets may in fact cover post-policy forgery. It’s a good idea to know your insurance coverage, before and after investing in real property.

The case is Jackson v. County of Amador, 186 Cal.App.4th 514 (Cal. App. 2010).

Loose Ends

Sunday, June 27th, 2010

How not to close a credit line.

PARKER, CO–Most residential resales go smoothly, but some seem to follow one bad turn after another.

This newer home near Denver was owned by Paul and Robin.

The property in question: back on the market.

When the couple agreed to divorce, they applied for a home equity line of credit to finance the break-up.  Approved for a line of $100,000 by TCF National Bank, Paul and Robin gave TCF a deed of trust even as they contracted to sell the property to Jennifer.

Robin moved out and gave Paul a power of attorney to handle details of the sale.  The power of attorney was on a standard form, appointing Paul to act for Robin “to sell and convey” the property “for such price as to (him) may seem advisable.”

When it came time to close, the title agent got a payoff demand from TCF.  The demand, also on a standard form, called for a payoff of $80,462 within one week, by check to be mailed to TCF’s Consumer Payoffs department in St. Paul, Minnesota.  The demand specified, “(a) signed authorization from the customer requesting the account to be closed is also required.  The section below can be used to accomplish this.  Please return original signatures with the payoff funds.”

Paul signed the form, on the signature lines provided, for himself and Robin.  Underneath the line for Robin’s signature he wrote “/s/ Power of Attorney.”

The sale closed, and the title agent wired $80,462 to TCF.  Both Jennifer and her purchase money lender got title insurance.

One year later, Robin was dunned by TCF for overdue payments under the old credit line.  Her lawyer contacted TCF and was told, “(a) wire transfer of $80,462 was received…and applied as a payment on the account.  However, because TCF did not receive a signed authorization from the borrowers requesting that the account be closed, the account has not been closed.”


After the sale to Jennifer, Paul continued to get monthly statements from TCF showing a zero balance and “available credit” of $100,000.  It was too tempting.  Paul made new draws until he maxed out the credit line, then he stopped making payments.

Robin too failed to pay, and TCF began foreclosure proceedings.

While all of this was unfolding, Jennifer fell behind in her mortgage payments, and her lender commenced foreclosure.

Unbeknownst of each other, the two lenders held foreclosure sales and each “took back” the property.

The title insurance company for Jennifer’s lender entered the picture, and paid $160,543 to redeem the property from TCF’s foreclosure.  So now the title was clear, and Jennifer’s lender could deal with the property.

Having taken care of its insured, the title insurer then sued TCF to recover its money.

At the center of this dispute was the escrow officer employed by the title agent, who had handled the payoff.  Answering TCF’s claim that it did not receive authorization to close the loan account, the escrow officer produced copies of the authorization and the power of attorney.  She vowed she ‘must have’ mailed the forms to TCF, as ‘normal practice.’  But TCF denied receiving the forms and, even if they did, said they would not rely on Paul’s signature for Robin because the power of attorney did not expressly authorize him to close the loan account.

TCF won the argument, and the title insure took the loss.  Paul doesn’t answer, and Robin is forgiven.

Moral:  Our story ends with a mystery–who dropped the ball?

It seems likely that escrow mailed the authorization to TCF, but whoever received it there may not have matched it with the payoff received by wire.  Or, just as likely, the recipient may have found the power of attorney as unreliable, but didn’t contact escrow to say so.

Modern real estate transactions frequently close, and go to record, with loose ends and unfinished business.  Take, for example, the closing with a release of lien or mortgage “to come”–as happened here.

In real estate, loose ends represent risk.