Maryland's Statutory Power of Attorney - Learn It, Accept It, or Get Ready for Liability

A person walks into your office or local branch, presents a power of attorney, and wants to sign a legal instrument or contract on another person’s behalf or asks you to change title to or withdraw money from another person’s account.  Sound familiar?  If so, then listen up. 

Powers of attorney can vary substantially depending on the drafter.  As a result, many companies and institutions have created their own form power of attorney to eliminate the uncertainty of whether the instrument presented grants the agent the requisite authority to act.  Often, a patron will bring in a “foreign” power of attorney (i.e., not the form that the company or institution prepared), and the company or institution will reject the “foreign” power of attorney (even if it is legally sufficient) and require the agent to come back with a signed copy of its form power of attorney.  This presents a serious problem when the principal is no longer capable of signing a power of attorney (think dementia) or is unavailable (think vacation in Italy).  In response to this problem, the Maryland Legislature enacted the Maryland General and Limited Power of Attorney Act which took effect on October 1, 2010.

The Act creates a statutory form power of attorney and provides that a person (this means you—banks, insurance companies, title companies, and anybody else dealing with a power of attorney) may not require an additional or different form of power of attorney for any authority granted in the statutory form power of attorney.  In other words, if you are presented with a statutory form power of attorney, and the agent is acting within the scope of the instrument, you must accept it … or get ready for the potential of opening your wallet.  Failure to accept an acknowledged statutory form power of attorney may subject you to liability for attorneys’ fees and costs incurred in an action or proceeding to confirm the validity or mandate acceptance of the statutory form power of attorney.  To avoid liability for noncompliance with the Act, you should be familiar with and able to recognize the new statutory form power of attorney, and you should be sure to accept it.  If you are an employer and your employees or agents are responsible for making the call on whether to accept a power of attorney, it is your responsibly to make sure that your employees and agents are familiar with the new law.

For more information on the new statutory form power of attorney, contact Emerson Dorsey, chair of the firm's business and real estate departments.