March 2011 Vol. 4, No. 2

Claims Corner

Powers of Attorney and Real Estate Fraud

Nationwide real estate fraud and identity theft are on the rise. Many cases involving mortgage fraud include the use of a power of attorney.

There are legitimate reasons for a party to a transaction to use a power of attorney, but when your clients are using one, you should always investigate the circumstances of the transaction. Ask the clients why they cannot be at the closing or why they cannot come to your office to sign the documents before the closing. As with every transaction, you should always know your client. If you are initially contacted by someone other than the actual party to the transaction, it is important to investigate the transaction closely. In that situation it is imperative to locate the principal independently of the contact information given to you by the person who initially approached you.

ATG has had several claims where the principal who purportedly gave the power of attorney to an agent has claimed not to have executed the power of attorney. In all of the claims, the ATG title agent had not met the principal who was their client. Typically, some relative has approached the ATG title insurance agent and provided an executed power of attorney. Sometime after the closing, the principal contacts ATG and claims never to have signed the power of attorney. These claims could probably be avoided if all attorneys made sure to meet the individual who is the principal in the power of attorney.

The Illinois Power of Attorney Act was amended in 2010. The amendments go into effect July 1, 2011, and impose more requirements on the agent (seePower of Attorney Act Amendmentsin this issue). Attorneys reviewing powers of attorney should be familiar with the changes that are going into effect.

If you have any questions about using a power of attorney, contact the ATG Underwriting Department,, 217.403.0020, or 312.752.1990.

© ATG|Casenotes/Bulletin 1103_v4n2

[Last update: 3-14-11]