Is an Agent Under a New York Power of Attorney Personally Liable for a Real Estate Sales Contract?
A power of attorney is a legal document where a principal grants an agent authority to act in place of the principal. For example, the owner of a piece of real estate can execute a power of attorney authorizing an agent to sell the property on their behalf. This means the agent can execute a sales contract and close on the deal in the absence of the principal.
Judge: Sister Not Responsible for Brother’s Aborted Real Estate Closing
Generally speaking, a properly authorized agent acting under a power of attorney is not personally liable for any contract they sign on the principal’s behalf. That is to say, if something goes wrong with a contract, the aggrieved party can only take legal action against the principal, not their agent. That is because the agent is not acting independently, but rather at the instruction of the principal.
A recent case from here in New York City, Adamo v. Mazzei, helps to illustrate how this principle works in practice. In this case, an incarcerated man (the principal) signed a power of attorney granting his sister (the agent) the authority to sell a vacant lot that he owned on Staten Island. The agent subsequently signed a sales contract with a buyer.
Prior to closing, however, the agent learned that her brother had signed a second power of attorney naming his daughter as agent. The sister believed this terminated her own authority to act. To avoid any potential misunderstanding, the sister separately executed a notarized termination of her authority under the original power of attorney.
A dispute later arose between the principal and the potential buyer (the plaintiff) that prevented the closing. The potential buyer then sued both the principal and his sister. The sister moved to be dismissed from the action as she could not be held liable for the aborted deal between the plaintiff and the principal.
A Richmond County Supreme Court judge agreed. He held that under the plain language of the sales contract, the principal was the seller. The fact the sister signed the contract as her brother’s agent did not change this fact or mean the sister personally guaranteed the deal. Furthermore, the sister’s prompt action in terminating her power of attorney made it clear that she no longer had any authority to act for her brother. Whatever legal claims the plaintiff has against the principal, they do not extend to his former agent.
Contact a Brooklyn Powers of Attorney Lawyer
A power of attorney is an important part of any Brooklyn resident’s estate plan. It allows someone to act for you if you are unable to do so for any reason. But it is equally critical to periodically review and amend your power of attorney as your situation changes to ensure a responsible person is willing and able to act should the need arise.
If you need assistance from an experienced Brooklyn powers of attorney lawyer, contact Yeung & Associates, PLLC, today at 718-889-7568 to schedule a consultation.
Source:
scholar.google.com/scholar_case?case=4825036512412556687