On August 15, 2010, the State of New York enacted revisions to its laws regarding the statutory requirements of powers of attorney. The State of New York had previously amended its power of attorney law in 2009 to reduce what were perceived to be abuses of power by agents. The 2009 changes to the New York power of attorney law were previously discussed here. However, the 2009 amendments to the New York power of attorney law resulted in a number of ambiguities and unintended consequences. The 2010 revisions to the New York power of attorney law are an attempt to simplify and provide clarification to the 2009 law. Of primary significance to clients is that, as discussed below, powers of attorney given primarily for business or commercial purposes do not need to be in compliance with the onerous requirements of the 2009 law.
The 2010 revisions will become effective on September 13, 2010; however, the revisions will be retroactive to the effective date of the 2009 law, September 1, 2009. Accordingly, grants of powers of attorney made between September 1, 2009 and September 13, 2010 will not need to be re-executed and will be valid in the State of New York, as long as they comply with the requirements of the 2010 revisions (even if they did not comply with the 2009 law at the time of execution).
The 2010 revisions significantly amend the 2009 law to provide that the requirements of the 2009 law will not apply to the following types of powers of attorney:
- powers given primarily for a business or commercial purpose, including, among others:
- powers given to or for the benefit of a creditor in connection with a loan or other credit transaction;
- powers to the extent they are coupled with an interest in the subject of the power; and
- powers given to facilitate transfer or disposition of one or more specific stocks, bonds or other assets;
- proxies or other delegations of power to exercise voting rights or management rights;
- powers created on a form prescribed by a government or governmental agency for a governmental purpose;
- powers authorizing a third party to prepare, execute, submit and/or file a document with a government, governmental agency or other third party;
- powers authorizing a financial institution or an employee thereof to act with respect to the principal's account;
- powers given by current or future directors, officers, shareholders, employees, partners, limited partners, members, unit owners or managers of a legal or commercial entity in that person’s capacity as such;
- powers contained in a partnership agreement, limited liability company operating agreement, declaration of trust or other similar instrument governing the affairs of an entity;
- powers given to a condominium managing agent in connection with the management of a condominium unit;
- powers given to a real estate broker in connection with the listing of real property, a mortgage loan or lease;
- powers authorizing acceptance of service of process on behalf of a principal; and
- powers created pursuant to authorization provided by a federal or state statute that specifically contemplates creation of such power.
Under the 2009 law, powers of attorney executed by non-individuals were not subject to the formal requirements of the 2009 law. The 2010 revisions further clarify that powers of attorney executed by persons acting as fiduciaries or as officials of a legal, governmental or commercial entity are also not subject to those requirements.
Under the 2009 law, when an individual executed a power of attorney in the State of New York, it revoked all prior powers of attorney granted by that individual (including unrelated powers of attorney), unless the newly executed power of attorney specifically stated otherwise. The 2010 revisions eliminate this provision and provide that when an individual executes a power of attorney under New York law, all prior powers of attorney granted by that individual will remain valid unless they are affirmatively revoked. However, the 2010 revisions also provide that all accidental revocations of powers of attorney made prior to September 13, 2010 under the 2009 law will remain valid, even after the 2010 revisions become effective.
Under the 2009 law, all short-form powers of attorney and non-statutory powers of attorney executed by individuals within the State of New York (including by individuals who were not domiciled in the State of New York) needed to comply with the 2009 law. However, powers of attorney executed outside the State of New York were valid in the State of New York if they complied with the laws of the state in which they were executed or the State of New York, even if the principal was domiciled in the State of New York. The 2010 revisions similarly provide that powers of attorney executed outside the State of New York are valid in the State of New York if they comply with the laws of the state in which they were executed or the State of New York, but amend the 2009 law to provide that a power of attorney executed in the State of New York by a domiciliary of another state, in compliance with that state’s laws, will be valid in the State of New York.
Although the 2010 revisions to the New York power of attorney law address a number of problems that were inherent in the 2009 law and provide that the requirements of the 2009 law are not applicable in a number of situations, New York domiciles should still take care to ensure that any powers of attorney they execute in the State of New York comply with the requirements of the 2009 law, as amended by the 2010 revisions.