A Blow to Powers of Attorney
The Texas Supreme Court denied a motion for rehearing in the case of The Finance Commission of Texas, et al vs. Norwood, et al. The Finance Commission and the Credit Union Commission of Texas had rules and regulations allowing home equity loans to be closed using a power of attorney from the homeowner. But the 2003 provision in the Texas Constitution allowing home equity loans (previously prohibited throughout the history of Texas) required that the closing of a home equity loan be done at the offices of the lender, at a title company or at any attorney’s office. Yet both of those agencies allowed homeowners to execute powers of attorney to appoint an agent to sign the documents for the homeowners so that the homeowners did not have to go to closing. All parties said the requirement in the Constitution was to prevent a homeowner from being coerced in his or her own home to sign documents they weren’t sure they should sign. The Supreme Court said that the regulations allowing powers of attorney to be used to close those loans effectively nullified the provision in the Constitution because the regulations allowed the homeowner to get coerced at home to sign the power of attorney. Obviously the regulations did not say that it was ok to coerce the homeowner at home, but if bad actors would coerce a homeowner to sign the loan application they would also coerce the homeowner to sign the power of attorney. So the Supreme Court invalidated the regulations. Then the Finance Commission and the Credit Union Commission of Texas, joined by the Texas Bankers Association, asked the Supreme Court to reconsider. They did, but did not change their ruling.
But Then a Bright Spot for Powers of Attorney
In Cole v McWillie, the Eastland Court of Appeals held that a power of attorney that did not have language saying it continued to be effective after the person giving the power of attorney became incompetent was nevertheless sufficient to allow the agent to give an effective and valid deed. However, the deed was avoidable at the election of the person giving the power of attorney or his estate. A claim to set aside the deed would have to be filed within four years. In this case, that span of time had passed and the deed could not be challenged.