April Newsletter

Who has authority to sign???

Occasionally we come across a buyer entity or a seller entity who is an LLC, a Corporation, a Trust or even an Estate.

The questions that usually arise are…”who has authority to sign? What happens if they want to sign with a Power of Attorney? How do we prepare the purchase contract?” To help answer these questions, we put together a few scenarios that will help explain.

POWER OF ATTORNEY – A.K.A Limited or Durable POA for real estate transactions. The “Attorney-in-Fact” may sign for the Buyer or Seller provided the POA is properly signed by the principal and an unrelated witness. Both the witness and the principal’s signatures must be notarized. The POA must specifically grant power to sign for a specific transaction. The POA will need to be recorded at the time of the real estate transaction.

TRUST – Only the names of the trustee(s) or properly installed successor Trustee(s) may sign to convey property into or out of a trust. The trust agreement controls the activities of the Trustee(s) and any authority granted must be clearly stated in the Trust agreement. Remember a Trustee may not give POA to any other party unless the Trust Agreement specifically provides for it.

ESTATE – Usually, a probate will be required prior to conveying real property out of an estate. The Probate will name a Personal Representative who has the authority to sign conveyance documents. Remember, a Will does not alway grant the power to sell.

DIVORCE – A Divorce Decree may or may not be sufficient to authorize a person to sell property jointly owned prior to a divorce. If the court “grants and conveys” real property to one of the parties, this would be a legal conveyance as long as the document is recorded. If the court “awards” the property to one of the parties, this type of decree would require the other party to execute and convey a deed to the awarded party. There must actually be a granting of the property in the public record, either by the court in the divorce decree or by the spouse on a deed.

CORPORATION – Whenever a corporation, such as a bank with an REO property conveys real property, a corporate resolution naming the authorized signer must be provided. The resolution must be signed by an officer of the corporation who is not the named signor. Additionally the entity must be legally authorized to do business in the State of Arizona and be in good standing.

LLC – Whenever an LLC is the buyer or seller of real property, The LLC;s articles of organization approved by the Arizona corporation commission. The LLC;s Operating agreement signed by all of the LLC members. If a TRUST is also a member of the LLC, the trust agreement will be needed as well. When it’s time to prepare the purchase or listing agreement, the seller or buyer will be the entity and the signor will be the authorized individual. We realize sometimes it appears we are picky about documents and we require a lot to be uploaded in Brokermint, but the last thing we want is for you to list a property that cannot be sold, or have a long delay in the process. The title company will be requiring many of these documents in order to satisfy title insurance requirements. If you are listing a property with one of the above scenarios, it is a good idea to obtain a prelim title report from one of our preferred title partners. This way, any potential title requirements could be dealt with prior to going into escrow. As always, let us know of any questions. This information is provided as a guide and is not intended to be construed as legal advice. Buyers and Sellers should always seek legal counsel, if they have any questions or concerns on how to take or convey title.

Barry Nicholas
602-752-5148
barry@trurealty.com