Fraudulent POA in FIRPTA Transactions: How to Protect Your Deals
In real estate, granting a Power of Attorney (POA) allows someone trusted to manage the sale of property on behalf of the owner. However, recent cases have revealed a rising concern: fraudulent POA in FIRPTA transactions, particularly involving foreign sellers who may no longer be alive.
At Total FIRPTA, LLC, we specialize in FIRPTA compliance and frequently handle POAs for foreign sellers. While a POA can authorize property sales, it rarely covers federal tax matters under FIRPTA. This is why verifying the seller’s identity is crucial before proceeding.
Real Cases Highlighting the Risk
Earlier this year, we encountered two cases during our standard identity checks where sellers were reportedly unavailable. Families claimed the principal was on extended vacations with no access to communication. When we requested a video call, the POA reluctantly admitted the principal had passed away. Whether intentional or not, these situations underscore the importance of thorough verification to prevent fraudulent POA in FIRPTA transactions.
How to Verify the Principal Before Proceeding
To ensure the principal is alive and genuinely authorized the sale, consider these steps:
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Video Call Verification – Conduct a video call with the principal whenever possible. This is one of the most reliable ways to confirm identity and well-being.
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Consult the Seller’s Attorney – Reach out to the attorney who drafted the POA to verify the principal’s status.
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Request Proof of Life – For foreign sellers, request recent documentation or government-issued IDs, such as passports.
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Review the POA Documents Thoroughly – Ensure the POA is current, grants the authority to sell, and that all signatures are valid.
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Check Probate Status – If there’s suspicion of death, verify with probate courts whether the principal has passed away or has ongoing sales.
Why Work With Total FIRPTA, LLC
Navigating FIRPTA transactions can be complex, but our firm provides a meticulous, detail-oriented approach. We help closing agents and real estate professionals prevent fraud, comply with federal requirements, and ensure smooth, secure transactions. With our guidance, you gain a trusted ally committed to protecting every party in the deal.
By taking these steps and working with experienced professionals, you can avoid the pitfalls of fraudulent POA in FIRPTA transactions and ensure every property sale is legitimate and compliant.