In the world of real estate, it’s common for individuals to grant a Power of Attorney (POA) to someone they trust to handle the sale of their property. However, recent cases have highlighted a growing concern—fraudulent use of POAs, especially relating to foreign sellers who may no longer be alive.
As a firm specializing in FIRPTA compliance, we’re well-acquainted with the use of POAs for foreign sellers. However, while a POA can authorize someone to sell property, it rarely extends to federal tax matters, such as those governed by FIRPTA. As such, we often need to confirm the seller’s identity directly before proceeding.
This is where things get interesting…
In two recent cases, we encountered a serious issue during our standard identity verification process. Initially, the foreign sellers were said to be unavailable. One family claimed the principal was on an extended vacation with no access to phone or email. When we insisted on completing the video call before closing, the POA reluctantly admitted that the principal was deceased. While it’s unclear if the parties involved were intentionally attempting to use the POA fraudulently, these incidents were an eye-opener for us.
We’ve encountered fraudulent POA scenarios twice this year, and we want to help you avoid the same pitfalls. We are here to ensure every transaction runs smoothly, efficiently, and securely, and we’re happy to provide guidance or assistance when you need it.
Before moving forward with a POA transaction, here are a few ways you can ensure the principal is alive and truly authorized the sale:
1. Video Call Verification: Offer to conduct a video call with the principal (if possible). This is one of the most effective ways to confirm their identity and well-being.
2. Consult the Seller’s Attorney: Contact the attorney who drafted the POA to ensure the principal’s health and identity.
3. Request Proof of Life: If the seller is foreign, ask for recent documentation or government-issued IDs (such as a passport) to verify the principal’s status.
4. Review the Documents Thoroughly: Confirm that the POA is current and includes the specific authority to sell the property. Be wary of outdated or incomplete POA forms and check to see who signed the contract.
5. Check for Probate Status: If you suspect the principal is deceased, check the probate courts to see if the principal has passed away or if they have other sales in progress.
Why Work with Our Firm?
At Total FIRPTA, LLC, we specialize in helping closing agents and real estate professionals navigate the complexities of FIRPTA transactions. We believe in a thorough, detail-oriented approach, ensuring all parties are protected from potential fraud or complications. By partnering with us, you’re not just fulfilling a requirement — you’re gaining a trusted ally who cares about your success and the smooth execution of your deals.