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What is a Power of Attorney?
A power of attorney is a legal document that allows one person to appoint another to officially and legally act on the first person’s behalf. Attorneys, for example, often are granted a power of attorney by a client to sign contracts and legal documents on that client’s behalf. Real estate closings often take place with the attorney for one party or another power of attorney. Other circumstances involving a power of attorney might include a family member like a son or daughter being given a power of attorney by a parent to access financial accounts in order to pay bills and other living expenses. In the business world, a power of attorney can be used in any circumstance where the principal authorizes an agent to act on his or her behalf. Here is a quick discussion and answers to a few frequently asked questions.
What are the California Requirements for a Valid Power of Attorney?
In California, a power of attorney must be in writing, must specify the powers being granted, and must be signed by the principal and be notarized or signed in the presence of two witnesses. Those witnesses must also sign the power of attorney document. To be recorded — often necessary with real estate transactions — the power of attorney must be notarized regardless of how many witnesses are present and signing. To execute a power of attorney, the principal must have the same capacity for entering into a contract, be of sound mind, and be over the age of 18. See Cal. Probate Code, §4000 and following.
Can Power of Attorney be Given by a Corporation?
No. Power of attorney is for natural persons. A corporation, LLC, or other corporate entity acts through its authorized human officers, agents, and employees. Rather than a power of attorney, a corporate officer is “authorized” to act on behalf of the corporation. If that officer, agent, or employee is unable to act, then another officer, agent, or employee is given authority to act.
What are the Types of Power of Attorney?
In general, there are three types of power of attorney in common usage – general, limited, and health care. That being said, as a written document, a power of attorney can be written in any manner in terms of powers granted or limited, in terms of conditions, and in terms of time periods. A general power of attorney, for example, is a full grant of the power to act and can even be extended during the time of the principal’s incapacity with the proper language. A limited power of attorney by contrast is limited to the powers listed and granted in the document. A health care power of attorney is, as the name would suggest, a power of attorney granted to make health care decisions and that allows the holder of the power of attorney to have access to medical records.
In terms of timing, a power of attorney can become effective upon execution or can “spring to life” upon the occurrence of some event. For example, with health care powers of attorney, they usually only become effective when the principal is unconscious or under other mental incapacity. As for termination date, usually a transaction-specific power of attorney terminates when the transaction terminates (such as the closing for real estate is finished).
What is the Procedure?
Various forms are available to fill in the blanks created by the State of California. There is a form provided in the statute. See Cal. Prob. Code, §4401. Likewise, a good San Diego business attorney can create a custom-drafted power of attorney specific to your business or real estate transaction. Once the form is completed, it must be signed and notarized or witnessed as discussed above.
Contact San Diego Corporate Law Today
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard can assist with a power of attorney, with the formation of your business entity — corporations, LLCs, and other forms – and can help with business mergers and acquisitions, contract drafting and review, including commercial leases, and establishment and licensing of trademarks, copyrights, and trade secrets.
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