CB Title GroupCB Title Group
Close With Confidence

(973) 921-0990

NY Title Industry Bulletin: New Statutory Short Form Power of Attorney

RE:New Statutory Short Form Power of Attorney (GOL Section 5-1501 et seq.)
On December 15, 2020, Governor Cuomo signed into law a revision of the General Obligations Law Section 5-1501 that dramatically changed the Statutory Short Form Power of Attorney. The new language can be found at: A.5630-A or S.3923-A. Passage was conditioned upon the amendment of the new law to require execution be in the presence of two (2) witnesses. This amendment, S.888, was just moved to the floor calendar and is expected to be passed without substantive change.
The new Statutory Short Form Power of Attorney will be effective on the 180th day after passage, which will be Sunday June 13, 2021. Please note that all existing powers that were valid under the laws at the time they were executed are grandfathered and will remain valid.
Among the notable changes are the following:

  • In addition to being acknowledged, the new power must be witnessed by two persons who are not named in the power as agents or as permissible recipients of gifts. The new law incorporates by reference EPTL §3-2.1(a)(2) for witness execution of a Will, which provision requires that the principal’s signature be affixed in the presence of each of the attesting witnesses or be acknowledged to each of them by the principal that he or she affixed their signature. The principal may sign or acknowledge their signature to each attesting witness separately. The new law specifically provides that the person who takes the acknowledgement may also serve as one of the witnesses.
  • Creates a procedure with specific time periods for acceptance or rejection of the power by a third party §5-1504(3) and makes it unlawful for any party to unreasonably refuse to honor a properly executed power created either pursuant to the new provisions or an existing statutory short form power of attorney properly executed in accordance with the laws in effect at the time of its execution §5-1504(2) and §5-1504(4)(b).
  • Subjects any party who unreasonably rejects a valid power (including an existing power executed prior to this change in the law) to an award of damages, including attorney’s fees, in any action (brought under §5-1510) to compel the party to honor the power §5-1504(4)(b).
  • Creates a presumption of validity of the power when the principal’s signature has been acknowledged and witnessed §5-1504(1) and provides safe-harbor provisions for those who, in good faith, accept an acknowledged power of attorney without actual knowledge of forgery or revocation; §5-1504(4)(a) or that the power was procured through fraud, duress or undue influence §5-1504(5) .
  • Repeals the Statutory Gift Rider and expands an agent’s power to make gifts in the aggregate per calendar year from the prior $500 limit to $5,000 without requiring a modification to the form § 5-1513(1)(f)(I). Gifts above this amount, gifts involving real estate and/or gifts that differ from the powers referenced in the body of the power require specific authorization in the MODIFICATIONS section of the form.
  • Allows a power to qualify as a statutory short form power if it contains substantially conforming language rather than exact wording, if optional and nonrelevant clauses are omitted and notwithstanding insignificant mistakes in wording, spelling, punctuation or formatting §5-1501B(1)(d), §5-1501B(2) and §5-1501(2)(n).
  • Allows a third party to sign at the direction of a principal who is physically unable. When a person signs at the direction of a principal he or she shall sign by writing or printing the principal’s name and printing and signing his or her own name §5-1501B(1)(b).

Acceptance & Rejection Period
The new law makes it unlawful for a third party who is located or doing business in New York from refusing, without reasonable cause, to honor any statutory short form power of attorney either executed under the new statute or that was previously executed in accordance with the laws in effect at the time of its execution. §5-1504(2) & §5-1504(4)(b)
It establishes a 10-business day period (see §5-1504(3)(a)) within which a party presented with a statutory short form power of attorney must:

  • Honor the power §5-1504(3)(a)(a);
  • Provide a written rejection to both the principal and agent specifically setting forth ALL reasons for rejection §5-1504(3)(a)(b); or,
  • Request the agent to execute an acknowledged full force and effect affidavit pursuant to §5-1504(7) if such affidavit was not presented to the party with the power of attorney §5-1504(3)(a)(c).

Additionally, § 5-1504(1)(d) provides that a party may request, and rely upon, without further investigation:

  • An agent’s certification under penalty of perjury of any factual matter concerning the principal, agent or power of attorney; and,
  • An opinion of counsel as to any matter of law concerning the power of attorney if the person making the request provides in a writing or other record the reason for the request.

The opinion of counsel must be provided at the principal’s expense unless the request is made more than ten business days after the power of attorney is presented for acceptance. § 5-1504(1)(e)
Upon presentation of the agent’s affidavit and/or the attorney opinion, the party shall have seven (7) business days to honor the power, unless there remain other valid, unresolved grounds for rejection. 1504(3)(a)(c)

For the purposes of this subdivision, notice shall be considered delivered at the time such notice is mailed. The time requirements to honor, reject or request a full force and effect affidavit do not apply to the department of audit and control or a public retirement system of the state as defined in Retirement and Social Security Law § 152(6). See §5-1504(3)(a)

Reasonable Grounds for Rejection
The statute provides several examples of valid reasons for rejection in §5-1504(3)(a) and §5-1504(2)(a) which include, but are not limited to:

  • Non-conforming form;
  • Missing or wrong signature;
  • Invalid notarization;
  • Unacceptable identification;
  • Presentation of uncertified copy of statutory short form power;
  • Knowledge of a referral of the principal, agent or a person acting for or with the agent to the local adult protective services unit;
  • Actual knowledge of the principal’s death or a reasonable basis for believing the principal has died;
  • Actual knowledge of the incapacity of the principal or a reasonable basis for believing that the principal is incapacitated where the power of attorney tendered is a nondurable power of attorney;
  • Actual knowledge or a reasonable basis for believing that the principal was incapacitated at the time the power of attorney was executed;
  • Actual knowledge or a reasonable basis for believing that the power of attorney was procured through fraud, duress or undue influence;
  • Actual notice, pursuant to subdivision five of this section, of the termination or revocation of the power of attorney;
  • The refusal by a title insurance company to underwrite title insurance for a gift of real property that does not contain express instructions or purposes of the principal with respect to gifts in the modifications section of the statutory short form power of attorney or in the non-statutory power of attorney;
  • The refusal of a request for a certification or an opinion of counsel under paragraph (d) of subdivision one of this section.

If the agent and/or principal responds to the reasons for rejection in writing to the third party, the third party shall, within seven (7) business days after receipt of said response:

  • Honor the power; or,
  • Finally reject the power in writing sent to the agent, principal and any attorney that provided an opinion as to the validity of the power that sets forth the reasons for the final rejection.

Unreasonable Grounds for Rejection
§5-1504(2)(b) specifically enumerates that the following matters are deemed to be unreasonable grounds for rejection of the power:

  • The power of attorney is not on a form prescribed by the third party to whom the power of attorney is presented.
  • There has been a lapse of time since the execution of the power of attorney.
  • There is a lapse of time between the date of acknowledgment of the signature of the principal and the date of acknowledgment of the signature of any agent.

We would like to share this information with you, so that you can better serve your clients.

As always, if you have any questions about Title Insurance or if there is anything else we can do to assist you, please contact us at (212) 239-8789.