New Texas Statutory Power of Attorney

& Limitations on Use

Paul McNutt, Jr.
Executive Vice President
General Counsel
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Powers of Attorney - Basics
A power of attorney is a written instrument whereby
one person, the principal, appoints another person
to be his or her agent or attorney-in-fact for some
particular purpose, and further provides for the
agents powers and duties.
The general rule is that the authority of the agent may
never be extended by mere construction beyond
that which is expressly stated or which is necessary
and proper to carry out the authority given.
Reese vs. Medlock, 27 Tex. 120, 123 (1863), Gouldy v. Metcalf, 75
12 S.W. 830, 831 (Tex. 1889).
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Powers of Attorney - Basics
There are 3 basic types of Powers of Attorney
General Gives general authority, and is often too vague
for Title Company purposes.
Special Authorized very narrow authority to do a
specific act. Sometimes called a specific power of
attorney. It must give the exact description of the act.
Durable Specifically states that it is not effected by the
principals subsequent disability or incapacity.
What we Prefer is a Specific Durable Power of
Attorney.
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Powers of Attorney New Statutory
Durable Power of Attorney Form
Effective 1/1/2014, a revised Statutory Durable
Power of Attorney form, is set forth in Section
752.051 of the newly created Texas Estate
Code.
Use of the statutory form, with language
referencing the statute, expands the authority
of the power of attorney to include the
expanded descriptions of authority set forth
in Chapter 752 of the Estate Code.
Power of Attorney-New Statutory Power
of Attorney Form Effective 1/1/2014.
The principal change by this new form is it
requires initialing the sections chosen to be
used in order to be effective.
Section (N) if initialed provides for all of (A)
through (M) to be effective, therefore not
requiring initialing the individual sections
above.
This new form is the only form of Statutory
Power of Attorney in Texas, effective
1/1/2014.
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Power of Attorney-Former Statutory
Power of Attorneys being offered.
As any Statutory Power of Attorney previously
executed can still be used, if still effective,
you should be careful to review the date of
the POA, and accept the former form of
Statutory POA only if executed before
1/1/2014.
As the Probate Code was changed over to an
Estate Code 1/1/2014, references to the
Probate Code in the heading must be only on
POAs executed before 1/1/2014.
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Power of Attorney-New Statutory Power
of Attorney Form Effective 1/1/2014.
Initialing is the most prominent new
requirement of the new Statutory Durable
POA form.
Other new features include pages describing
the agents duties and liability to the principal.
If asked to use the new form, care must be
taken that all parts of the form are included,
and nothing is changed or altered unless by
an attorney or the party.
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Powers of Attorney
When You Cannot Use Them
Death of the principal
If Terminated or Revoked -
Expired under its terms. Be sure to see if it has
a fixed term and that the date is not past.
Actual revocation by the principal
If the Spouse is the agent, by divorce or
annulment of the marriage.
Appointment of a Guardian or Temporary
Guardian by a court.
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Powers of Attorney
When You Cannot Use Them
Self Dealing by the Agent
When the Agent:
Deals with the Principals property for his own
benefit.
Conveys the Principals property to themselves.
Releases a mortgage made by the agent in favor
of the principal.
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Powers of Attorney
When You Cannot Use Them
Self Dealing by the Agent
When the Agent -
Executes a gift deed, unless specifically allowed
by the POA.
Executes a mortgage for the principal or
releases a mortgage owned by the principal
without consideration.
Mortgages Principals property to him or herself.
Delegates agents authority to someone else,
unless specifically allowed by the POA.
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Powers of Attorney
When You Cannot Use Them
When the Principal is a Fiduciary without
Authority to Delegate
An Independent Administrator or Executor of an
estate cannot delegate authority through a POA.
A guardian of a person or estate may not give a
POA for a person to act for them. The Court can
appoint a new guardian.
A trustee of a trust cannot delegate authority
unless the trust agreement we review specifically
authorizes the trustee to do so. A successor
trustee can act instead as authorized in the trust.
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Powers of Attorney
Oral Ratification
In order to avoid fraud, and insure that the
principal is alive on the day of closing, we
typically require our closers to confirm via
telephone that the principal is both alive and is
aware of the transaction the POA is being used
on the day of closing.
Your principal can expect a call the day of
closing.
We try to ratify via e-mail for soldiers who are
overseas in a combat zone, as close to the
closing time as possible.
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Powers of Attorney
Military Powers of Attorney
Military POA is executed under federal law and
says they can be notarized by a J AG Notary.
In order to accept a J AG notary, the person must
either be enlisted in the military or be able to
prove they are a bona fide contractor for the
military, employed outside the United States or
its territories.
Texas has a specific law allowing ANY
commissioned officer of superior rank to notarize
if the principal is enlisted, without a notary seal of
any type. We typically require a military or
dependent ID to validate this type of notary.
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Powers of Attorney Use for Home
Equity Loans Restricted
Home Equity Loans - The Texas Constitution
provides the loan must be closed in a title
company, attorneys office or lenders office.
In a decision issued by the Supreme Court,
ACORN:Finance Commn of Tex. v. Norwood,
it was held the POA must have been executed at the
same location required for the loan itself.
Therefore, we are limited in use of POA on Home
Equity loans by this decision, and by our TDI
Procedural Rules for Endorsement T-42 and T-
42.1.
POA- Home Equity Loans T-42
Endorsement Restrictions
Home Equity Loans require we issue a T-42
endorsement. However subparagraph (f)
cannot be given unless the loan is closed at
the office of the title company, per P-44 C.
Therefore to use a POA for an HEL, we must
require the execution of the POA to be done
at the office of the title company.
This is required because of the Texas
Supreme Court decision in Acorn above.
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POA Home Equity Loans T-42.1
Endorsement Restrictions
If we cannot issue with T-42 (f) we must
eliminate all of T-42.1 sub-pargraphs (a)-(h)
and (l) in order to insure.
This requires the lender change their closing
instructions to allow the limited T-42 and the
elimination of the sections of T-42.1.
Any POA must be executed at the office of the
lender or the title company and we must
obtain proof of the place of execution.
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POA-Home Equity Loans Restricted
Use of Military POAs, executed elsewhere, or
Durable POAs executed long before the
current transaction, is eliminated by the
Supreme Court decision.
We must have a specific POA for the current
transaction, executed at our office to insure
with all sections of T-42.
If the lender closes their own deal, and agrees
to eliminate T-42 (f), you can insure, but only
if the POA is executed at the lenders office.
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POA for Mechanics Lien Contracts on
Homestead Property
The Texas Constitution requires for the
execution of a Mechanics Lien Contract by
owners on their homestead the Contract
must be executed at the office of a title
company, an attorneys office, or the lender.
We therefore must require that any POA must
therefore also be executed at the same
location, and we must have evidence of the
place of execution to insure the loan.
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POA for Reverse Mortgage-Limitations
The Texas Department of Insurance
Procedural Rules only allow under T-43
endorsement section (ii)-(iv) to be given if the
closing takes place in the office of the title
company. This is set out in P-45 E.
Therefore, if a POA is used for a reverse
mortgage we require that the POA must have
also been executed at the office of the title
company, and must be specific to the deal.
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Powers of Attorney
Specific Problems
No Original Power of Attorney
No closing, as no presumption exists that a
person has given anyone authority to convey.
It is a requirement that the Power of Attorney be
filed in the Real Property Records of the County
of the land, with the sale or loan instruments.
Once filed of record, a certified copy is
considered the same as an original for all legal
purposes.
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Powers of Attorney
Specific Problems
Improper Acknowledgment
Expired Notary Stamp
Notary signs in the principals place.
Military officer notarizes without stamp and fails
to designate location or rank.
J AG Notary stamps a civilian POA and does
not designate location.
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Powers of Attorney
Specific Problems
Lack of a Heading on a Statutory Power of
Attorney
Unless the Statutory Power of Attorney contains
the heading that references the Texas Power of
Attorney Act, it does not incorporate the
language in the act, therefore none of the terms
are defined.
This applies to both the new Estate Code
Statutory Durable POA, and the former Statutory
POA under the Probate Code.
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Powers of Attorney
Specific Problems-Initials
From 1993 to 1997, the Texas statutory power of attorney form
needed each category of authority initialed. We still see this
form floating around, and often people do not initial the
correct parts of it, making it void. If you have blanks next to
the individual sections, make sure the right ones were
initialed.
The Statutory Durable POA form adopted in 1997 provides
that the agent has the authority unless a provision is marked
out, so we rarely have issues with the form.
Now the new Statutory Durable POA, effective 1/1/2014,
requires again the use of initials, and will be void unless
initialed. Care in review must be made, for initials in the
correct paragraphs for your transaction.
Powers of Attorney-Specific Problems
Provision for Only Effective if Disabled
The new Statutory Power of Attorney, as well
as the former form, had a place to select
whether the POA was effective immediately,
or would only be effective if the party later
became disabled.
We do not insure based on any future disability
POA, and require legal action be taken for a
guardian to be appointed instead.
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STATUTORY DURABLE POWER OF ATTORNEY
NOTICE: THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND SWEEPING.
THEY ARE EXPLAINED IN THE DURABLE POWER OF ATTORNEY ACT, SUBTITLE P, TITLE
2, ESTATES CODE. IF YOU HAVE ANY QUESTIONS ABOUT THESE POWERS, OBTAIN
COMPETENT LEGAL ADVICE. THIS DOCUMENT DOES NOT AUTHORIZE ANYONE TO
MAKE MEDICAL AND OTHER HEALTH-CARE DECISIONS FOR YOU. YOU MAY REVOKE
THIS POWER OF ATTORNEY IF YOU LATER WISH TO DO SO.
You should select someone you trust to serve as your agent (attorney in fact). Unless you specify
otherwise, generally the agent's (attorney in fact's) authority will continue until:
(1) you die or revoke the power of attorney;
(2) your agent (attorney in fact) resigns or is unable to act for you; or
(3) a guardian is appointed for your estate.
I, __________ (insert your name and address), appoint __________ (insert the name and address of the
person appointed) as my agent (attorney in fact) to act for me in any lawful way with respect to all of the
following powers that I have initialed below.
TO GRANT ALL OF THE FOLLOWING POWERS, INITIAL THE LINE IN FRONT OF (N) AND
IGNORE THE LINES IN FRONT OF THE OTHER POWERS LISTED IN (A) THROUGH (M).
TO GRANT A POWER, YOU MUST INITIAL THE LINE IN FRONT OF THE POWER YOU ARE
GRANTING.
TO WITHHOLD A POWER, DO NOT INITIAL THE LINE IN FRONT OF THE POWER. YOU
MAY, BUT DO NOT NEED TO, CROSS OUT EACH POWER WITHHELD.
____ (A) Real property transactions;
____ (B) Tangible personal property transactions;
____ (C) Stock and bond transactions;
____ (D) Commodity and option transactions;
____ (E) Banking and other financial institution transactions;
____ (F) Business operating transactions;
____ (G) Insurance and annuity transactions;
____ (H) Estate, trust, and other beneficiary transactions;
____ (I) Claims and litigation;
____ (J ) Personal and family maintenance;
____ (K) Benefits from social security, Medicare, Medicaid, or other governmental
programs or civil or military service;
____ (L) Retirement plan transactions;
____ (M) Tax matters;
____ (N) ALL OF THE POWERS LISTED IN (A) THROUGH (M). YOU DO NOT
HAVE TO INITIAL THE LINE IN FRONT OF ANY OTHER POWER IF YOU
INITIAL LINE (N).

Statutory Durable Power of Attorney Page 2
SPECIAL INSTRUCTIONS:
Special instructions applicable to gifts (initial in front of the following sentence to have it apply):
____ I grant my agent (attorney in fact) the power to apply my property to make gifts outright
to or for the benefit of a person, including by the exercise of a presently exercisable
general power of appointment held by me, except that the amount of a gift to an
individual may not exceed the amount of annual exclusions allowed from the federal gift
tax for the calendar year of the gift.
ON THE FOLLOWING LINES YOU MAY GIVE SPECIAL INSTRUCTIONS LIMITING OR
EXTENDING THE POWERS GRANTED TO YOUR AGENT.
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
UNLESS YOU DIRECT OTHERWISE ABOVE, THIS POWER OF ATTORNEY IS EFFECTIVE
IMMEDIATELY AND WILL CONTINUE UNTIL IT IS REVOKED.
CHOOSE ONE OF THE FOLLOWING ALTERNATIVES BY CROSSING OUT THE
ALTERNATIVE NOT CHOSEN:
(A) This power of attorney is not affected by my subsequent disability or incapacity.
(B) This power of attorney becomes effective upon my disability or incapacity.
YOU SHOULD CHOOSE ALTERNATIVE (A) IF THIS POWER OF ATTORNEY IS TO BECOME
EFFECTIVE ON THE DATE IT IS EXECUTED.
IF NEITHER (A) NOR (B) IS CROSSED OUT, IT WILL BE ASSUMED THAT YOU CHOSE
ALTERNATIVE (A).
If Alternative (B) is chosen and a definition of my disability or incapacity is not contained in this power
of attorney, I shall be considered disabled or incapacitated for purposes of this power of attorney if a
physician certifies in writing at a date later than the date this power of attorney is executed that, based on
the physician's medical examination of me, I am mentally incapable of managing my financial affairs. I
authorize the physician who examines me for this purpose to disclose my physical or mental condition to
another person for purposes of this power of attorney. A third party who accepts this power of attorney
is fully protected from any action taken under this power of attorney that is based on the determination
made by a physician of my disability or incapacity.
Statutory Durable Power of Attorney Page 3
I agree that any third party who receives a copy of this document may act under it. Revocation of the
durable power of attorney is not effective as to a third party until the third party receives actual notice of
the revocation. I agree to indemnify the third party for any claims that arise against the third party
because of reliance on this power of attorney.
If any agent named by me dies, becomes legally disabled, resigns, or refuses to act, I name the following
(each to act alone and successively, in the order named) as successor(s) to that agent:
_________________________________________________________________________.
Signed this ______ day of __________, _____________

___________________________
(your signature)
State of _______________________
County of ______________________
This document was acknowledged before me on ____________(date) by __________________ (name
of principal).
__________________________________________
(signature of notarial officer)
(Seal, if any, of notary) ________________________________________
(printed name) ________________________________________
My commission expires: ______________



Statutory Durable Power of Attorney Page 4
IMPORTANT INFORMATION FOR AGENT (ATTORNEY IN FACT)

Agent's Duties
When you accept the authority granted under this power of attorney, you establish a "fiduciary"
relationship with the principal. This is a special legal relationship that imposes on you legal duties that
continue until you resign or the power of attorney is terminated or revoked by the principal or by
operation of law. A fiduciary duty generally includes the duty to:
(1) act in good faith;
(2) do nothing beyond the authority granted in this power of attorney;
(3) act loyally for the principal's benefit;
(4) avoid conflicts that would impair your ability to act in the principal's best interest; and
(5) disclose your identity as an agent or attorney in fact when you act for the principal by
writing or printing the name of the principal and signing your own name as "agent" or
"attorney in fact" in the following manner:
(Principal's Name) by (Your Signature) as Agent (or as Attorney in Fact)
In addition, the Durable Power of Attorney Act (Subtitle P, Title 2, Estates Code) requires you to:
(1) maintain records of each action taken or decision made on behalf of the principal;
(2) maintain all records until delivered to the principal, released by the principal, or
discharged by a court; and
(3) if requested by the principal, provide an accounting to the principal that, unless otherwise
directed by the principal or otherwise provided in the Special Instructions, must include:
(A) the property belonging to the principal that has come to your knowledge or into
your possession;
(B) each action taken or decision made by you as agent or attorney in fact;
(C) a complete account of receipts, disbursements, and other actions of you as agent
or attorney in fact that includes the source and nature of each receipt,
disbursement, or action, with receipts of principal and income shown separately;
(D) a listing of all property over which you have exercised control that includes an
adequate description of each asset and the asset's current value, if known to you;
(E) the cash balance on hand and the name and location of the depository at which the
cash balance is kept;
(F) each known liability;
(G) any other information and facts known to you as necessary for a full and definite
understanding of the exact condition of the property belonging to the principal;
and
(H) all documentation regarding the principal's property.
Statutory Durable Power of Attorney Page 5
Termination of Agent's Authority
You must stop acting on behalf of the principal if you learn of any event that terminates this power of
attorney or your authority under this power of attorney. An event that terminates this power of attorney
or your authority to act under this power of attorney includes:
(1) the principal's death;
(2) the principal's revocation of this power of attorney or your authority;
(3) the occurrence of a termination event stated in this power of attorney;
(4) if you are married to the principal, the dissolution of your marriage by court decree of
divorce or annulment;
(5) the appointment and qualification of a permanent guardian of the principal's estate; or
(6) if ordered by a court, the suspension of this power of attorney on the appointment and
qualification of a temporary guardian until the date the term of the temporary guardian
expires.
Liability of Agent
The authority granted to you under this power of attorney is specified in the Durable Power of Attorney
Act (Subtitle P, Title 2, Estates Code). If you violate the Durable Power of Attorney Act or act beyond
the authority granted, you may be liable for any damages caused by the violation or subject to
prosecution for misapplication of property by a fiduciary under Chapter 32 of the Texas Penal Code.
THE ATTORNEY IN FACT OR AGENT, BY ACCEPTING OR ACTING UNDER THE
APPOINTMENT, ASSUMES THE FIDUCIARY AND OTHER LEGAL RESPONSIBILITIES OF AN
AGENT.