December 2011 Vol. 4, No. 11

Real Estate and Title Insurance News

Power of Attorney

Signing Documents for Your Clients without Power of Attorney

While the purpose of RESPA (Real Estate Settlement Procedures Act, 12 USC &§2601et seq., 1974) was to protect consumers, one of the consequences of the legislation was burdening buyers and sellers with stacks of paperwork to sign at closing. Often clients feel it would be more convenient simply to have their attorney go to closing and sign all those documents for them. It is possible for clients to grant this authority to their attorney, or any other designated agent, by signing a power of attorney. However, without a power of attorney, there are only a few circumstances when attorneys may sign documents for their client.

Uniform Settlement Statement

The settlement statement described by RESPA in 12 USC &§2603, makes no mention of the signatures of any party being required. The Settlement Statement provided by the Department of Housing and Urban Development (commonly referred to as the HUD-1) does not include a signature line. The section of the Code of Federal Regulations that details changes that are allowed to be made to the standard HUD-1 form specifically says, "Signature lines may be added." 24 CFR &§ 3500.9 (emphasis added). In addition, Illinois law does not require any signatures on the settlement form. The Predatory Lending Database statute, 765 ILCS 77/76, requires that a title insurance company or closing agent must submit a wealth of information to Illinois' Predatory Lending Database for any mortgage application, including the details of the settlement statement. However, no mention is made of signatures from the parties.

Despite lack of federal or state obligation, many title insurance companies, including ATG, require signatures of the parties on settlement statements. ATG requires the signatures as written proof of the parties' consent to the terms of the closing. Because the settlement statement demonstrates the parties' actual knowledge of and consent to the terms of the closing, ATG requires a power of attorney for an attorney to sign the settlement statement on behalf of a client.

A disciplinary case illustrates the risk. Many issues appear in the case,In re Andrew Joseph Rukavina, No 07 CH 96 (Nov 21 2008), however, one involved Mr. Rukavina's use of a power of attorney to sign documents on behalf of clients at closing. In that case, Mr. Rukavina represented absent clients at different closings and signed closing document under a power of attorney. In at least one case, the client later called Mr. Rukavina to challenge the closing charges. ATG wants to be sure that if a client in that situation is dissatisfied with the charges, the matter remains between the client and attorney, and does not involve the closer. A power of attorney ensures that the closer has met his or her obligations in fully informing the parties of the closing charges.

  • ATG requires a power of attorney for attorneys to sign the settlement statement on behalf of their clients.

Real Estate Transfer Declaration

Another narrow circumstance in which an attorney could possibly sign in place of a buyer or seller in Illinois is in a transfer declaration. Illinois tax form PTAX-203, the Illinois Real Estate Transfer Declaration, states that "the buyer and seller (or their agents)" must sign the form. Attorneys could interpret this to mean that they can sign the document instead of their client, even without a power of attorney. The statute promulgating the form seems to support this interpretation. It says that a transfer declaration must be signed by at least one buyer and at least one seller, "or by the attorneys or agents for the sellers and buyers." 35 ILCS 200/31-25.

It is unclear whether the attorney would have to be acting with apparent authority or acting as an agent of the client to sign the form, especially if the client had only given oral authorization to the attorney. If the statute is read to grant attorneys this authority without a written power of attorney authorization, it could be problematic. The other side may be reluctant to rely on only an attorney signature if the authorization given by the principal is not backed in writing.

Very similar language to that in the Transfer Tax statute appears in the Chicago Municipal Code, Section 3-33-070A, and the Cook County Code, Section 74-107(a), which promulgate the Chicago transfer tax declaration and the Cook County transfer tax declaration.

  • ATG permits attorneys to sign the Illinois, Chicago, and Cook County transfer tax declarations on behalf of clients without a power of attorney, based on the statutory, municipal code and county code language promulgating those forms.

1099 Filing and Other IRS Forms

It has become an increasingly common practice for the attorney representing the seller to sign 1099 and other tax-related documents on behalf of the seller without having a formal power of attorney signed by the seller authorizing such action. When the tax documents are submitted to ATG for reporting to the Internal Revenue Service, ATG has been rejecting those documents until the appropriate power of attorney form has been produced.

Section 6061 of the Internal Revenue Code (IRC) provides that "any return, statement, or other document required to be made under any provision of the internal revenue laws, or regulations shall be signed in accordance with forms or procedures prescribed by the Secretary." Regulation &§1.6061-1(a) provides that "each individual...shall sign the income tax return required to be made by him except that the return may be signed for the taxpayer by an agent who is duly authorized in accordance with paragraph (a)(5) or (b) of &§1.6012-1 to make such return." Regulation &§1.6012-1(a)(5) provides that whenever a return is made by an agent of the taxpayer, the return must be accompanied " a power of attorney (or copy thereof) authorizing him to represent his principal in making, executing, or filing the return." (Regulation &§1.6012-1(b) contains provisions regarding returns by nonresident aliens). That section also states that the IRS's power of attorney form, Form 2848, is sufficient for this purpose.

Additionally, Regulation &§1.6061-1(a) provides that any other "...returns, statements, or documents required under the provisions of subtitle A [income taxes] or F [information returns] of the Code...shall be signed in accordance with any regulations contained in this chapter, or any instructions, issued with respect to such returns, statements, or other documents." Regulation &§1.6045-4(l) requires the real estate reporting person to solicit the taxpayer identification number (TIN) of the transferor, and that the transferor is required to certify in writing under penalties of perjury to the reporting person that the TIN is correct. IRS Form W-9 may be used for such certification. Reg. &§1.6045-4(l)(1). The instructions for Form W-9 require that for real estate transactions, the certification must be signed by the taxpayer.

In 1997, IRC &§6045(e) was amended to exempt from reporting transactions involving the sale or exchange of the taxpayer's principal residence. In order to claim the exemption, each transferor must sign and deliver to the real estate reporting person a certification that the transaction is exempt from reporting. Revenue Procedure 2007-12, superseding Revenue Procedure 98-20, contains the requirements and sample form for the certification. That procedure requires that the certification be "...signed by the seller under penalties of perjury..."

The documents and certifications required of the taxpayer/seller in order to report a real estate transaction must be signed by the taxpayer. No other person, including the taxpayer's attorney, may sign those documents on behalf of the taxpayer without a written power of attorney from the taxpayer. This would include the Certification of No Information Reporting. If these documents are submitted to ATG for purposes of reporting the transaction to the IRS and are signed by someone other than the seller/taxpayer, the forms will be returned for signature by the seller/taxpayer unless a written power of attorney form signed by the seller/taxpayer is submitted with the documents.

  • ATG requires that if an attorney will sign tax documents under a power of attorney, including the Illinois Statutory Short Form Power of Attorney for Property (755 ILCS 45/3-1, et seq.), that power must specifically grant the power to the agent to sign the 1099 reporting forms and documents. The statutory form may not grant any such power under "(a) Real Estate Transactions," so a specific power to sign the forms may need to be added under paragraph 3 of the form. Such tax documents include the Certification of No Information Reporting and the W-9.

Agency and Authority

While the transfer declaration appears to create an exception to an attorney's ability to act as an agent of his client, Illinois courts have rejected the idea of an attorney acting as an agent for the sale of land without written authorization. InMonti v Tangora, 99 Ill App 3d 575, 425 NE2d 597, 54 Ill Dec. 732 (1981), a buyer tried to argue that a seller's attorney had bound the seller to certain terms in a contract, even though there was no written power of attorney. The seller had not signed a contract with the terms, but the buyer argued that the attorney had made the agreement and that the attorney had apparent authority to do so. The appellate court held that, while an attorney could be the agent for the sale of land, the attorney could do so only with express written authorization.Monti, 99 Ill App 3d at 579. AlthoughMontidealt with a circumstance in which a principal did not want his attorney to be allowed as an agent, the rule remains the same — an attorney must have a written power of attorney to sign a contract on behalf of a client.

Even when agency is given and in writing, there can still be problems if it is not a limited power of attorney given for the specific purpose of a real estate transaction.McHarry v Bowmanwas a case in which a husband had a power of attorney from his wife that said it was valid "to sign any legal document with [her] name where such signature may be required." McHarry, 274 Ill App 487 (3rd D, 1934). But when the husband tried to use the power of attorney to take out a mortgage the court held that it was invalid. A general power of attorney is too "vague and uncertain" to be work for a real estate transaction. To be valid for actions such as borrowing money, executing notes and signing deeds, a power of attorney must show the "clear and obvious intent of the agency therein created."

InCrawford Savings & Loan Association v Dvorak, a daughter had express agency to act on behalf of her mother in running a family business. She was legally entitled to apply for licenses, make insurance claims and sign tax returns for her mother. But when the mother defaulted on a mortgage that the daughter had taken out without the mother's knowledge, the court held that the mortgage was invalid. Despite the daughter's agency authority, the court said, "We do not view such authority... to empower the agent to transact matters of extraordinary business, such as mortgaging the premises in which the business is located." Dvorak, 40 Ill App 3d 288, 352 NE2d 261 (1st Dist, 1976).

Agency does not have to be express; it can also be implied through a special relationship or prior business dealings. But courts have consistently recognized that taking out a mortgage is the kind of unique situation in which authority less than a specific power of attorney is not legitimate. The general rule is "an agent, even a managing agent, has no implied authority to borrow funds on behalf of her principal."Universal Fire & Casualty Insurance Co v Jabin, 1992 WL 566294 (ND Ill). An attorney signing documents at closing with only implied authority as a client's agent is likely going to have the mortgage found invalid by a court.

  • ATG requires that when any instrument to be insured is signed under power of attorney, that the Illinois Short Form Power of Attorney for Property be used, or the power of attorney must be specifically approved by ATG's Underwriting Department.

  • Grantor under Power of Attorney: When the agent executes a deed or mortgage pursuant to a power of attorney, the grantor or mortgagor clause should state the agency, such as: "John Smith [principal] by Joe Jones [agent], his attorney-in-fact." The marital status and civil union status of the principal must be stated in the grantor/mortgagor clause, and if the property is the homestead of the principal, the principal's spouse or civil union partner must join in the conveyance.

  • Signing under Power of Attorney: The agent should sign the deed using the same words as contained in the grantor/mortgagor clause, "John Smith [principal] by Joe Jones [agent], his attorney-in-fact."

  • Acknowledging an Agent's Signature: When the notary acknowledges the signature of the agent, the acknowledgment should read: "Joe Jones [agent], as attorney-in-fact for John Smith [principal]."

  • ATG requires that when a property owner gives a power of attorney for an agent to sign a mortgage using the Illinois Short Form Power of Attorney for Property, that the authority to mortgage be expressly listed in the powers, selecting both, "(a) real estate transactions," and "(m) borrowing transactions," on the form.

  • ATG requires that when any instrument to be insured is signed under power of attorney, the power of attorney must be recorded.


Not signing documents on behalf of a client is for the protection of the attorney as well as the buyer or seller of property. The Illinois Attorney Registration and Disciplinary Commission (ARDC) regularly hands out punishment to attorneys who attempt to get around requirements for client signatures. Often these cases involve blatant forgeries by attorneys, but the ARDC will also issue penalties for attorneys who sign documents without their clients' permission.

Misplaced trust led to the suspension of Chicago attorney Eberechukwun N. Nwakudu Ekechukwu.In re Eberechukwu Ekechukwu, Commission No. 05 CH 70 (Ill Att'y Reg & Disciplinary Comm, Feb 14, 2007). Ekechukwu was retained by Charles Moka to defend him in an action by a bank over a defaulted loan. The bank was also suing Moka's wife Funmi, and Moka asked Ekechukwu to represent her as well. Without ever meeting or talking to Funmi, Ekechukwu took her on as a client. The case ended up settling and the bank approved a Forbearance Agreement so that Moka and his wife could get out of default by resuming payments. When the document was finalized, Moka informed Ekechukwu that Funmi could not be there to sign it. Apparently believing she had the proper authority in her capacity as Funmi's attorney, Ekechukwu signed the agreement on Funmi's behalf. Moka never explained to Ekechukwu that he was estranged from his wife, and that she was unaware of the lawsuit and the settlement agreement.

Funmi eventually found out that there was a lien against her when she tried to refinance her condominium. It was then that she discovered that an attorney, whom she had never met, signed an agreement for her without authorization, and Funmi complained to the ARDC. Ekechukwu's defense was that she had been "drawing on her relationship with her own husband and their division of responsibilities" and assumed that Moka was acting with his wife's permission. Ekechukwu's misconduct resulted in suspension and a period of probation. If she had sought a power of attorney before signing the document for Funmi, she could have uncovered the truth and likely prevented the suspension.

While these two cases show the trouble attorneys can get into when they sign documents without a client's express authority, a 2006 Illinois appellate court case,Tuchowski v Rochford(368 Ill App 3d 441, 857 NE2d 829, 306 Ill Dec 430 (1st D Ill App 2006), illustrates the problems with not having a client know what is being signed at closing. Although Tuchowski was present at the closing of a property she was selling, she later sued her attorney for malpractice because she claimed the attorney rushed her through the closing and did not properly explain what she was signing. The court found in favor of Tuchowski, reasoning, "The trier of fact might find that Tuchowski's reliance on her attorney provided reasonable grounds for failing to read the documents she signed at the closing."Tuchowski, 368 Ill App at 446. If clients can win malpractice cases against attorneys who rush through closing, it is not hard to imagine the penalty for an attorney who signs documents at closing without the client's presence.


There are some narrow circumstances when an attorney's signature can be substituted for a client's, such as the Real Estate Transfer Declaration, but in general, attorneys should be wary of this practice. The way for an attorney to get legal protection is to get a power of attorney from the client. If clients cannot go to closing due to other obligations, or simply do not want to be bothered, power of attorney is the proper way for an attorney to sign documents for them.

© ATG|Casenotes/Bulletin 1112_v4n11

[Last update: 12-16-11]