Powers of attorney and entity closings.
Both are routine. Both stall files, for the same reason: they arrive too late for anyone to approve them.
Powers of attorney
A POA is not automatically acceptable because it is notarized. The title underwriter reviews and approves it, and your own requirements sit on top of that. Send it as soon as you know it exists.
- Specific beats general. A power of attorney that identifies the property and the transaction is far easier to approve than a broad general form.
- It usually has to be recorded in the county where the property sits, which means the original document, executed properly.
- The principal has to be alive and competent at closing. A POA terminates at death. If the principal's health is a factor, say so early.
- Deployed and overseas signers have workable options, but they involve lead time and sometimes consular or military notarization.
The pattern is always the same. The POA shows up two days before funding, underwriting has questions, the attorney in fact is in another time zone, and the closing moves. Sending it on day three costs nothing and prevents all of that.
Entity closings
When the borrower is an LLC, corporation, partnership, or trust, the question is authority: who is allowed to sign, and what proves it. Expect to produce some combination of the following.
- The certificate of formation and any amendments
- The operating agreement, bylaws, or partnership agreement
- A resolution or consent authorizing this specific transaction and naming the signer
- A certificate of existence or good standing
- For a trust, the trust agreement or a certificate of trust, and confirmation of the trustee's authority
Two recurring problems. The operating agreement requires consent of members who are not present or not aware, and the entity is not in good standing because a franchise tax filing was missed. Both are fixable, but not always quickly.
The rule for both
Documents that require approval should be sent for approval the week the file opens. Nothing about a POA or an entity package gets easier by waiting, and everything about it gets harder inside the last week.
Every file is different, and underwriters can view the same facts differently depending on the details. Always consult your escrow officer, who can take the specifics to the underwriter. Title and Lender requirements are also separate, so clearing one does not mean you have cleared the other.