On December 15, 2020, Governor Andrew Cuomo signed a bill simplifying the New York powers of attorney and including penalties for improperly refusing a New York powers of attorney by a third party.
The new law (A.5630-A / S.3923-A), which comes into effect June 2021, amends New York’s General Obligations Act, Article 5, Title 15, as follows:
- When defining “power of attorney”, the law now expressly contains both a statutory short form of power of attorney and a non-statutory power of attorney.
- A power of attorney no longer has to exactly match the wording of the legal short form, but can now essentially correspond to the legal short form. “Substantially compliant” is defined as “we”[ing] Language that essentially corresponds to the legal form, but is not identical to it. “
- A power of attorney can either be filled out by the client or by a person who signs on behalf of the client, provided that this person is a person other than the nominated representative or successor of the client. The person who signs on behalf of the client must sign in the presence of the client and on the instructions of the client.
- The Legal Gift Driver is eliminated and powers previously included in the Legal Gift Driver are now reflected in the Changes section of a Power of Attorney.
- A third party can now accept an allegedly recognized (i.e. notarized) power of attorney and rely on it, even if (1) the signature on the power of attorney is not authentic, (2) the power of attorney is void and invalid, or terminated, (3) the The alleged agent’s authority is invalid, invalid, or terminated, or (4) the agent is improperly exercising his authority – as long as the third party has no actual knowledge of these facts and is relying on the authority in good faith. However, a third party asked to accept a recognized power of attorney may request an expert’s certificate on a factual matter and a legal counsel’s opinion on a case relating to the power of attorney.
- Third parties are obliged to either (1) honor the power of attorney, (2) reject the reasons for the rejection in a written letter or (3) within ten (10) working days of submitting an original or a copy of a power of attorney certified by a lawyer ) Request the agent to provide a recognized affidavit stating that the power of attorney is in full force and effect. If the third party first rejects the power of attorney and then receives a written response, the third party must either comply with the power of attorney or reject it in writing within seven (7) working days of receiving the written response. If the third party requests the agent to make a recognized affidavit, the third party must comply with the legal short form of the power of attorney within seven (7) working days of receiving the affirmed affidavit.
- A court may award damages, including reasonable attorney’s fees and costs, if special proceedings are instituted to compel a third party to comply with a power of attorney and the court determines that the third party acted inappropriately to refuse to comply with a properly executed power of attorney .
It is important to note that third parties must honor and inappropriately refuse a power of attorney exercised in accordance with the laws in force at the time of its enforcement. Therefore, existing powers of attorney do not have to be carried out again at this point in time.
Marta J. Paczkowska, legal trainee at Cole Schotz, co-authored this blog.
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