Lenders: What’s the big deal, it’s just a power of attorney?

North Carolina recently passed a new NC Uniform Power of Attorney Act, which replaces the old Power of Attorney Chapter 32A and becomes effective January 1, 2018. The Act changes a number of provisions including a new short form power of attorney and a new limited power of attorney for real property. Other provisions affected include agent certification, durability of the document, gifting powers, self-dealing powers, co-agents and how to handle power of attorneys executed out of state. As a result, NC lenders will begin to see new power of attorney forms in 2018. With the adoption of the new Act and a recent opinion coming from the North Carolina State Bar, it is important that lenders rely on local attorneys for power of attorney documents and legal advice. 
 
On November 9, 2017, the North Carolina State Bar issued an opinion stating that a nursing home engaged in the unauthorized practice of law by handing out a blank power of attorney form to a resident’s family member. In the case of the nursing home, the non-attorney staff member provided a power of attorney form and had the facility’s social worker explain the contents of the document to the resident’s family member. The social worker also organized the execution and notarization of the document. 
 
Like nursing homes, lenders need to be cautious of employees providing or advising clients regarding legal forms. The unauthorized practice of law in North Carolina is defined as giving legal advice or counsel, aiding or assisting in the representation of a party before the courts, and selecting or assisting in the completion of legal documents (like a Power of Attorney). NC Gen Stat. §§ 84-2.1. 
 
In short, if a client needs to obtain a power of attorney or any other type of legal document for a bank transaction, refer them to a licensed attorney. Under no circumstances should a non-attorney employee provide a blank form and advise a client on how to fill it out. In the above opinion, the NC State Bar suggests there is a difference between recommending a client get a power of attorney and actually providing your client a form and explaining the contents. Lenders should warn employees that providing blank legal forms to clients constitutes the unauthorized practice of law. With the passage of the new Act, simple boilerplate forms may be detrimental to your clients and result in a lawsuit for your company.  

Published by Bess Harris Reynolds on December 13, 2017.