By Joann Prinzivalli
On August 13, 2010, Governor Paterson signed Chapter 340 of the Laws of 2010. This bill makes a number of technical corrections to the General Obligations Law as it relates to Statutory Short Form Powers of Attorney (SSFPOA) and other forms of Power. Here are some highlights of the changes:
A few of the “corrections” may spawn further corrections, such as the definition of “Powers of Attorney” in Section 5-1502.j. now *excluding* the documents listed in 5-1501C. The error is that the definition should have been of “Statutory Short Form Power of Attorney” and not merely “Power of Attorney.”
The “Major” was taken out of the “Statutory Major Gifts Rider” making it the Statutory Gifts Rider (SGR) rather than the SMGR.
Spelling, punctuation and formatting errors will not affect effectiveness – the result will be that such scrivener’s errors are to be cured by reference to the statute. This provision may provide a loophole for mischief.
The spelling of acknowledgment was amended to take out the obsolete extra “e” (acknowledgement? Somewhat reminiscent of the obsolete/obsolescent “judgement” (now spelled as “judgment”)
Excluded from the SSFPOA by new 5-1501C as a requirement are: business powers, powers coupled with an interest, powers given to creditors (such as the stock power given to a co-op lender), stock powers , proxies, government form powers, powers authorizing a party to appear or act before a government agency, bank powers, powers relating to business entity governance, condo powers, powers given to real estate brokers, acceptance of process, and powers authorized by other laws. This section caps off with a provision allowing SSFPOAs to be used for these purposes, as well.
Powers allow the creation, modification or revocation of a trust are allowed, except if the action is a “gift” transaction under Section5-1504
The word “arbitration” is replaced by the modern and more inclusive “alternative dispute resolution.”
Gifts under $500 in the aggregate in any calendar year may be made without an SGR. Anything that would exceed $500 requires an SGR
The rules on refusal were changed slightly. It was clarified that third parties located in the state, or “doing business in the state” are covered. The title insurance company exception was narrowed to gift transfers under an SGR that does not have express instructions.
Apparently some recording officers were rejecting recordings where one of many agents had not signed, even if the agent who signed the accompanying document had an acknowledged signature. That abuse by the recording officers will now have to stop.
“Fiduciary duty” has been pluralized under “fiduciary relationship” and contains references to many “duties.”
It is now clear that agents do not have to be individuals. This makes it clear that an attorney in fact can be a corporation or entity. I imagine that instead of naming every attorney in a law firm to act as attorney in fact, with or without special succession rules, it might be simpler to name “Dewey & Cheatham, P.C.” as the attorney in fact.
There have been some changes in the methodology and effectiveness of revocation, though further clarification may be necessary as to the effect of recording. There appears to be a conflict between the idea of record notice and the idea of actual notice.
The biggest change in the statute is a reversal of the insane requirement that the execution of a power revokes any and all prior powers executed by the principal. This was a mistake, and I am glad the legislature fixed this. The corrected provision no states that:
The execution of a power of attorney does not revoke any power of attorney previously executed by the principal.
Powers executed outside the state may comply with New York law or the law of the other jurisdiction. Powers executed in New York by a domiciliary of another state, using the other state’s form, are valid in New York. (However, it’s going to be necessary to ascertain domicile, which may be different than residence, in the event a foreign form is executed in New York for New York purposes).
One impossibility, given the law’s actual effective date of September 12, 2010, is a part of the directive to the Law Revision Commission, which is charged with evaluating the SGR. The initial report from the commission is due on or before September 1, 2010. One might presume that under the circumstances, the commission may be allowed to make its preliminary report at a reasonable later date, though dated as of September 1, 2010, nunc pro tunc.
The final kicker is the effective date and its putatively retroactive effect Since the bill was signed August 13th, it becomes law September 12th (30 days after signing), but on that date it becomes retroactive to September 1, 2009.
While it’s very nice that the legislature is correcting a mistake, the retroactive effect might be legally challenged as unconstitutionally ex post facto (see CALDER v. BULL, 3 U.S. 386 (1798), at least for any Principal who did in fact intend to revoke prior powers by executing an SSFPOA between 9/1/2009 and 9/11/2010.
However, to the extent that the Chapter merely clarifies matters already provided for by the previous statutory patch, the retroactive effect may well be fortuitous.
We’re going to be working to get the new forms up and available as soon as possible.