A duly notarized energy of lawyer offers Balch & Bingham LLP the authority to execute mortgages

In Forbes v Platinum Mortgage, Inc., No. 1180985, 2020 WL 746533 (Ala. February 14, 2020), the Alabama Supreme Court upheld a mortgage. There the husband borrowed $ 175,000 and secured the loan with a mortgage on the couple’s house. The husband signed the mortgage for himself and signed on his wife’s behalf – under a power of attorney from his wife. The woman was later declared incompetent and eventually died. The restorer sued to have the loan void, claiming the power of attorney had been forged.

The notary stated that the woman had signed the power of attorney and that she appeared competent when signing it. The court stated that the Alabama Code very clearly protects a party relying on a properly notarized power of attorney without actual knowledge of the falsehood. The court cited Ala. Code §26-1A-119, which states that “a person who conducts a transaction by relying on a recognized power of attorney without actually knowing that the power of attorney is void, invalid or terminated is that of the supposed.” Representative’s authority is invalid, invalid, or terminated, or that the agent exceeds or improperly exercises the agent’s authority will be completely exonerated. “The court then explained the reasons for public order:

The Court notes that section 26-1A-119 (c) has been taken almost verbatim from the Unified Power of Attorney Act. The uniform commentary on § 26-1A-119 states that “the risk that a power of attorney is invalid is imposed on the client rather than on the person who accepts the power of attorney”. Lenders and other businesses can therefore rely on an agent’s signature, authorized by a power of attorney, to complete each transaction as if the principal were present and providing their own signature. Only if the person conducting the transaction for a lender or other company is actually aware of the invalidity of the power of attorney can the transaction be canceled

Both lenders and title insurers should welcome this involvement. The Alabama Supreme Court has made it clear that if legal process is followed, lenders will not bear the risk. This is what the legislature intended. However, lenders should ensure that these legal procedures are followed to avoid future problems.