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Is power of attorney being abused?

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Question: An owner claims he's hired a property manager for his own condo within our association. He gave his manager a limited revocable power of attorney (POA) to act in his stead. That POA has become a vehicle for harassing the board and our present manager. The board is now inundated with document demands and threats that our actions are all illegal and if we don't comply the POA holder will sue us. The power of attorney document does not have an expiration date or holder address and telephone number. The holder told the board that the POA is valid for one year. The holder appears to be using this document to disrupt our smoothly running association while attempting to take over our association's management. Doesn't the holder of the POA have to act in conformity with the authority granted by the principal who gave her the document? How will we know when this revocable POA is revoked? If we comply with something and the POA has been revoked, are we liable?

Answer: The holder of a POA does not have the right to harass board directors. Directors should take steps to minimize risk and protect themselves, the association and its titleholders from unnecessary liability.

Before handing over documents to a POA holder, boards should adopt their own guidelines to ensure the power of attorney is valid at each request or appearance. The board could demand additional information to accompany the POA and then consider the issue at a scheduled meeting. Reliance on the POA document at face value may be justified, but the board's duty of due diligence would require demanding the holder or the principal or both to verify the document's continued authenticity. Titleholders can sue boards that do not verify a POA's authenticity.

A POA takes a variety of forms but generally falls into two categories: a general power of attorney and a special or limited power of attorney. It can be revocable, irrevocable or expire on a specific date. Unless otherwise stated in the POA, the document expires upon the principal's death.

If the power of attorney grants the attorney-in-fact, or holder, the power to deal with real property matters, the POA should be recorded in the county where the property is located, giving notice of its existence or revocation. The board is justified in demanding that requests made by the holder be in writing and stating that duplicate requests will be ignored.

Nothing prevents the board from requiring the principal to indemnify, hold harmless and defend the association. In fact, many POAs contain such statements.

A power of attorney cannot confer membership rights under the covenants, conditions and restrictions (CC&Rs), and does not grant any rights under the Davis-Stirling Act (DSA). Courts have ruled that a POA holder doesn't have any recognizable standing to assert any rights restricted to the titleholder, stating that only the titleholder has the right in court to enforce CC&R and/or DSA rights. The POA may convey certain other rights to manage the property. The board should carefully examine the rights the holder is attempting to exercise to ensure that those rights are actually included in those granted to the POA holder.

If using a form for a power of attorney, the holder's name and address must be stated and it must be executed by the principal (titleholder) and notarized. The board must accept the POA form but may still demand proof it is currently in force and valid.

A limited POA should clearly state the limitation on the document's face whether referring to the actions the holder is allowed to take or the date on which the POA expires.

Because in your situation this is a revocable POA, each demand made necessitates that the board determine whether the POA has been revoked. The principal/titleholder should provide a notarized certification authorizing the POA and stating it has not been revoked. This will have to be done every time the POA is utilized, and ensures that the titleholder is still alive and that the POA has not been revoked.

Unless the document is a durable POA, which survives the incompetency (but not the death) of the principal, an association is justified in demanding continued proof that the principal is still competent to make his or her own decisions.

The POA would be invalid as to that property if the principal is no longer named on the deed or is no longer the titleholder of record. A copy of the current title needs to be obtained at regular intervals. The board also can adopt a rule that all fees associated with the POA are borne by the principal.

The board has a duty to protect itself, the association and its titleholders. A POA does not exempt the holder from abiding by the law. If certain licenses are required for the holder's actions, then those licenses must be provided to the board.

Glassman is an attorney specializing in corporate and business law. Vanitzian is an arbitrator and mediator. Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or email noexit@mindspring.com.

Copyright © 2014, Los Angeles Times
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