In a recent case, our office was asked to prepare a title insurance policy for a proposed insured where a prior recorded deed contained an apparent defect
(of title) caused by the grantor clause, signature and notary block each drafted as “Susan C. Smith, attorney in fact for Donald P. Peters.”
A power of attorney (POA) is an instrument in writing appointing an attorney-in-fact for a definite purpose, setting forth his or her power and duties. A power of attorney can be used in real estate transactions to authorize an “agent” (attorney-in-fact) to execute deeds, and other instruments on behalf of the “principal” (grantor or mortgagor).
Generally, for a real estate closing, a POA must explicitly grant authority to the agent to convey the real estate and should comply with M.G.L. c.190B, §§ 5-501, 502, 503, 504, 505, 506 and 507 (Uniform Probate Code). Unless revoked, POAs often remain effective even if the principal becomes incapacitated. There are several types of POA such as “revocable”, “non-revocable”, “springing”, “limited” or “durable.”
REBA Title Standard No. 34 provides guidance to conveyancers reviewing titles and for those preparing POAs. Land Court Guideline No. 15 assists registry personnel as well as the bar in determining the suitability of instruments presented for filing and affecting recorded and registered land.
When an agent or attorney, for the principal, executes a sealed instrument, the strict technical rule of the common law, requires that it be executed in the name of the principal in order to make his deed. Abbey v. Chase, 6 Cush. 54.
When an agent executes a deed under power of attorney the “grantor clause” should name the grantor only, and should not include the Agent’s name, as though there was no power of attorney. The signature block and execution must clearly indicate that the agent is signing on behalf of the principal. The acknowledgement should be that of the principal, through the act of the agent.
For example, if the seller of the property is Ellie Mitchell (principal), and the agent is Jennifer Newcomb, the grantor clause of the deed into a buyer should read, “Ellie Mitchell in consideration of One-Hundred Thousand Dollars ($100,000) grant to Paul Alexander individually…” The signature block and execution should read, “Ellie Mitchell by her attorney-in-fact Jennifer Newcomb or by Jennifer Newcomb her attorney-in-fact under Power of Attorney recorded with Registry of Deeds Book 55555, Page 333. The acknowledgement should read, “then personally appeared the aforementioned Jennifer Newcomb and acknowledged the foregoing instrument to be the free act and deed of Ellie Mitchell”.
The “grantor clause” of the deed presented to our office read, “Susan C. Smith, attorney-in-fact for Donald P. Peters in consideration of Two-Hundred Forty Thousand Dollars ($240,000.00) grants Cindy Small and Jasmine Small as husband and wife as tenants by the entirety…” The signature block read and was executed as, “Susan C. Smith, Attorney-in-fact for Donald P. Peters.” The acknowledgement clause read, “on this 25th, day of February, 2007, before me, the undersigned notary public, personally appeared Susan C. Smith, Attorney-in-fact for Donald P. Peters, proved to me through satisfactory evidence of identification, which was/were Massachusetts driver’s license, to be the person whose name is signed on the preceding document, and acknowledged to me that (she) signed it voluntarily for its stated purpose”
Our office reported the deed as a title defect, where the form of the “grantor clause”, “signature block”, “execution” and “acknowledgment” appeared improper. The requirement in our commitment for title insurance was for the seller to obtain and record a confirmatory deed from either the principal himself, or from the principal through their agent under POA, using the correct “grantor clause,” properly executed and acknowledged. Of course, the principal had since passed away and the conveyance was a few “bona-fide-purchaser for value” removed from the true current owner.
After several conversations with title insurance underwriters, there was a clear difference of opinion in the industry. Several title insurance companies denounced the deed as invalid or defective, requiring the estate of the principal be probated and a confirmatory deed signed by the heirs of law, and or personal representative or authorized signatory. Another title insurance company acknowledged the defect but allowed us to “issue a clean policy”, in reliance on a “Default Judgment” arising out of Tyler J. Amaral v. Julia C. Silva, Land Court Case No. 20 MISC 000104 (HPS).
In Amaral, Silva sold her interest in two plots of land to Rachel C. Nameika, one of Amaral’s predecessors in title. The grantor clauses of the deeds, although slightly different, effectively stated, “I, John T. Silva, under a Durable Power of Attorney for Julia C. Silva dated January 24, 1998, to be recorded herewith, hereby grant…” A cloud on the title was clear, where the grantor clause should have simply stated, “I, Julia C. Silva, hereby grant...”
Although
a “default judgment,” Judge Speicher wrote in his opinion:
Based upon these facts, the Court concludes that the words used in the grantor clause were, as a matter of law, the “functional equivalent” of the use of the words, “Julia C. Silva” … [and that] [s]uch a perceived mistake in deeds involving a POA creates, “no justification … for imposing a ‘gotcha’ forfeiture” on the parties to the deed or their successors in interest. Where, as here, the intent of the parities is clear, “a distinction without a difference” should not be the subject of legal concern. (Citations omitted.)
The Court was not aware of any Massachusetts decision holding that a deed executed in such fashion is invalid. Fretting over such an issue of form creates unnecessary title curative litigation.
Accordingly, the Amaral Court ordered that the deeds were valid and that the use in the grantor clause of the words, “John T. Silva under a durable power of attorney for Julia C. Silva … was as a matter of law the same as the use of the words Julia C. Silva.”
As Attorneys and Agents issuing title insurance policies, this difference of opinion among the industry raises legitimate concerns when underwriting transactions with similar title defects. As title insurance agents, it is best to have these issues thoroughly reviewed and authorized by underwriters prior to issuing a policy. Where the “default judgment” in Amaral, went without challenge, we wonder whether the outcome could have been different if there were opposition to the litigation.
A member of REBA’s
Title Insurance and National Affairs Section, Ken Mitchell is a partner in the
Norwell firm of Mitchell & Stein. His
practice centers on real estate matters, including title services, title
insurance and Land Court practice. He represents National Title Insurance
Companies, Renewable Energy Developers, landowners and law firms throughout the
Commonwealth. He is often engaged as
title consultant for transactions or litigation regarding land and title
issues. He can be contacted at kmitchell@steintitle.com.
