POAs, Mail Aways, and Mobile Notaries — Oh My!
A Quick Look at Alternative Closing Styles
This blog attempts to summarize some alternative closing options for those who can’t attend closing in person. Nothing in this blog should be used in place of actual legal advice. Please contact an attorney if you need an alternative closing.
If your clients can’t make it to closing — maybe they’ll be out of town, their work schedules won’t allow it, etc. — let us know early. There are lots of ways we can help with this. The most important thing to note is that it does take extra time and requires a few extra steps to arrange for an alternative closing style, so it’s necessary to tell the attorney (and the lender if your a buyer) as soon as possible if your client will require one. Waiting until the week of your closing or even the day of closing can cause significant delays.
The main ways we can help those who can’t make it to closing are as follows:
- Power of Attorney (POA)
- Mail Away
- Mobile Notary
- Signing Early
- or a mixture of the above
POWER OF ATTORNEY
The power of attorney creates an agent/principal relationship where the agent can do anything the principal can do. Just because you have been granted power of attorney, though, doesn’t mean you can then use your principal’s assets as your own; you have a fiduciary obligation to your principal to only act in a way that they would act to care for their interests, so if you do anything that isn’t in their best interest then you’re potentially personally liable to the principal.
There are many different kinds of POAs, so when we’re setting one up for a client we really have to consider which option would be best for their specific situation. For real estate we generally see two types of POAs:
General POA: This is a general grant of power for the agent to use. It can cover many things including healthcare provisions, stocks and bonds, real property, bank accounts, etc., all of which can be selected in the document.
Specific / Limited POA: This grants the agent the ability to do one specific thing with the POA, such as to sell a specific piece of property, and usually gives them a limited period of time in which to do that. It can also place further limitations on the agent like how much can money can be borrowed to purchase the property.
POAs can also be Durable or Non-Durable. If a POA is durable then the agent can use the power even if the principal becomes incapacitated. If a POA is Non-Durable then if anything happens to make the principal incapacitated then the agent can not use the power during the period of incapacitation.
POAs can also have springing powers and qualifiers drafted into them. This can cover situations such as when the principal is out of the country or other specific parameters that must be met in order for the POA to “spring” into power. Generally these powers will not be necessary for a real estate transaction, but if you want to know more you can talk to an attorney.
Two other things closing offices consider when POAs are involved in real estate transactions are the age of the POA and the U.S. State in which it was signed. Generally, closing attorneys want POAs that are not too old and are drafted in the same state they will be filed in.
A POA has very different uses for a buyer vs. a seller. If a buyer needs to use a POA, we need to know about it immediately because that will have to be approved by the lender; this can take a very long time and can be very difficult to get approved. During the pandemic particularly, some lenders have decided that because of COVID requirements they won’t accept a POA or mail away at all. Most lenders, though, will just require you to use their own POA that they trust and are used to using, and then once that is signed it will be sent to the attorney for approval. All these steps take time. The earlier you tell us about this, the higher likelihood your client will be able to use a POA.
For sellers, it’s a little more straightforward. The only thing we really get concerned with regarding the seller’s docs is the Deed. We really want that deed to be signed by the principal because it is filed in probate. If we use a POA on the deed then the POA has to be recorded in probate as well, which costs your clients extra money for recording. Typically if your client is going to come in early to sign a POA, we’ll also have them sign the deed so we can save them money. Usually for a seller we will use an original signed deed and then the power of attorney can sign everything else.
Using a POA will add an extra fee to your closing. It costs money to draft up a POA and to record it, and it affects the closing timeline as certain things will have to be done early in order to accommodate the need for a POA. It’s important to let your clients know this up front so they aren’t surprised when they get to the table.
It is also important to note that signing a POA is fairly easy for the principal, but the agent (especially for Buyers) will have to sign A LOT of paperwork with a POA signature; this means they don’t only sign their own name in place of the principal’s, they have to write “[their whole name], by [your whole name], as their attorney-in-fact.” They have to write that every single time they need to sign.
Mail away closings are very popular right now, particularly because Huntsville is a hot market and many people from out of state are looking to invest in property here. Those who don’t live here often don’t want to travel all the way to Alabama just for closing, so they will choose to do a mail away so they can sign from their own home. We can also do a mail away when a Seller moves to another country — we very recently did a mail away closing where the seller had moved to South Korea. In this case we always try to get as much done as we can before the clients leave town, so we’ll have them come in early to sign the deed or to sign a POA document, but there are often still documents that need to be signed on the day of closing so the client will just have to arrange to sign those with a notary. International buyers are a whole different story and require much more verification before they can purchase property here. So using a mail away for an international seller is much less complicated than using one for an international buyer.
For a mail away, we have to bump our timeline up and we work with the lender (if there is one involved) to their documents early so we can get them to the client. Once we have all the documents we need from the lender, we will typically print, highlight, and tag everything and overnight it to the buyer. If the buyer has any questions they can call the attorney and discuss the paperwork over the phone, and then the buyer will sign the documents with a notary. We usually recommend that a buyer mail away is sent via a UPS store; this may sound silly, but the UPS store has a notary in the store (plus they’ll scan it for you and help you email it back to the attorney) and they’ll help you pack it up and mail the original documents back to the attorney. We will include an overnight mailing slip in with the packet so that once everything is finished you can overnight it back to us and we know we will receive it in time.
When it comes to the selling side, the only original document we need is the deed, so that’s the only thing we will use a mail away for. If a seller is going to be out of town during closing, we can have them sign wherever they are with a notary and just email the scanned docs back — they may not have to actually mail the originals back unless they have the deed or other documents that need to be recorded or sent to the Lender.
A mail away closing is more expensive than a regular closing as there are extra steps and fees our office must incur in order to process one. Please ask for our fees if you are concerned about this.
When you do a closing within the office, you have the benefit of the attorney being right there with you. That attorney has the authority to describe all the legal documents to you, go over the numbers, and answer all of your questions. If you cannot be at closing though, the next best thing is to close with a notary. A notary cannot answer your questions regarding a closing – they only have the ability to say that you are who you say you are and that you signed the document they watched you sign- but you can always call the attorney if you have questions.
Our office has notaries on staff, and we have occasionally sent a staff member to a client to help them sign. We’ve done this with doctors who are on shift at hospitals, business people who are too busy to leave work, etc. While we tend not to do this unless it is absolutely necessary (because we do need our staff in the office) there are many local companies that provide mobile notary services. Please note: we don’t have any relationship with mobile notary companies so if you choose to use one it will be service provided apart from our office.
This is a brand new field that is coming out, and has been in higher demand since COVID hit. Many states have now implemented new laws regarding Remote Online Notaries (RONs) that allow you to go to a website where an e-notary can verify who you are by asking you a whole string of questions. They may ask you where you went to college or what street you lived on in a certain year, even if it was only for a brief period of time. It’s amazing what they can find out about you online. While Alabama has temporarily legalized some types of RONs during the State of Emergency, local probate courts are very slow to accept these changes. So we typically try to avoid using RONs in Alabama for now.
This sounds simple, but it is one of the best things you can do in these situations. It may be as simple as a buyer coming in early to sign a power of attorney or us mailing the buyer a POA document to sign early. On the selling side, if a seller can’t attend closing we always prefer to have them come in early to sign the deed, at which time they can also sign a POA if needed. One complication to signing early is that on the day-of-closing lender docs can really throw us off. For example, even if the seller has come in early to sign all their docs, if the buyer is using a VA or FHA loan there may be buyer docs that the seller has to sign on the day of closing. Even when we’re able to do these alternative closing styles, we still sometimes have to work with our clients on the day of closing. We always recommend that even if you use an alternative closing method you still make sure you’re available on the day of closing because if anything comes up that day we will need to be able to communicate with all parties involved.
The most important thing to remember when it comes to alternative closing styles is to notify the lender and the attorney as soon as possible. This will help ensure that everyone is able to stick to the original closing timeline and will give us plenty of time to arrange for whichever method works best for the client.
By: Geoffrey K. Middleton
Attorney at Law
Written in May 2021