Does anyone know whether there is a requirement that a Power of Attorney agreement (used to grant a non-depositor authorization to conduct banking activity on behalf a depositor)MUST be notarized? Or will the signature of a witness suffice in making the agreement enforceable?

Thanks

I have never come across an acceptable power of attorney with a witness signature exclusively. The very nature of the document and the power it grants leads for the need to have a notary public witness the signers attestation (is that a word?) that they actually desire the document to be put into force.

The notary's attestation (I used it too, Dawnie, so it must be a word ) also speaks to the ability of the signer to understand the document. A notary is supposed to know when a person isn't cognizant of what's being done.

In what state was the power of attorney in question executed? Each state has a law on what the principal of a power of attorney must do to create a valid power of attorney. Usually the laws about powers of attorney are found in a state's Probate Code.

Post deleted by WildTurkey

You are incorrect in your assumption. The validity of a power of attorney is governed by the law of the state in which it was executed not the state where it is presented.
That is why whenever an attorney-in-fact presents a power of attorney to a financial institution the first thing the financial institution must do is determine the state in which the power of attorney was executed.
After doing so, the financial institution msut then review that state's law to determine what are its requirements for the execution of a valid power of attorney.
Not all states require that the principal's signature be notarized in order for a power of attorney to be valid.
For example, California Probate Code Section 4121(c) provides that the principal's signature on a power of attorney must EITHER be acknowledged before a notary OR witnessed by 2 witnesses who satisfy the requirements of Probate Code Section 4122 [be an adult, not be the attorney-in-fact AND either witness the principal's signature or be present when the principal acknowledges his/her signature].

Thanks for all the great thoughts and ideas.

The specific situation that gave rise to this question is that my bank offers a POA form that can be completed so as to allow someone other than the depositor to conduct transactions on the account. What I noticed is that more than a few forms were not formally notarized. Instead of notarization, there was a statement from the Branch Manager that the depositor (who presumably is present)was "known to me". While I didn't challenge the integrity of said assertion, I was/am concerned that in the event of a subsequent dispute (and/or setup), the depositor could represent that the POA was not legally enforcable, and thus the bank might be liable for withdrawals transacted at the sole written direction of the POA.

It is situations like this that just make my skin crawl. What in god's name does the fact that the branch manager knows the depositor have to do with the customer executing a legal document that allows another person to act in their capacity? If this doesn't meet state law requirements for a POA, this branch manager should be called on the carpet for endangering the assets of the bank and appropriate POAs should be obtained prior to executing any further transactions.

I'll temper Randy's rant a bit and aim the torpedo elsewhere. It is evident that management needs to review the importance of obtaining notarizations (assuming they are required in your state for validity), and train the affected people.

Unless the branch managers who screwed up the subject POA documents had training on how the forms are to be completed and why, it's management of the bank that should take the hit for this kind of mess.

Once trained, though, I'd jump behind Randy and second every angry word he had to offer.

Thanks John - as always - a voice of reason.

Heh Heh I was right up there with Randy. People don't understand the implications of POA's and do the stupidest things with them! Even Notary's can make very stupid mistakes, leaving the bank and themselfs open to suit.

The branch manager basically gave legal advice (provided the POA form of his/her/the bank's choosing) and then stepped up to the plate and verified that the person signing it understood the legal implications and risks in signing it when they "witnessed" the form.

We had a rule at a past bank I really liked. We NEVER witnessed a POA for a client. Just because you know old man John as a monthly depositer, doesn't mean you know he's sane this week. When you witness you "attest" to his ability to sign with full understanding of what he's signing. Bank's have been called into court to attest to Wills and POA's that were executed, notarized, and "witnessed" by a couple of tellers. And do you want your tellers standing there saying "oh ya we know him..." in a court of law?

Management should attend a Notary class (a really good two or three day one) and learn about the liability involved in POA's and in notarizing docs. It will turn your hair white, but also stop this practice by your staff.

...and there's the whole issue of using a "known to me" type of verification.

What if that staff member quits next week?

Then the signer is potentially "known to nobody"...

Based on some of the responses, I looked into the purpose for having a legal document notarized. As a couple of you had pointed out, the act of notarizing is a verfication of identity (which I knew), but also is a statement that the notary has represented the person understood the POA agreement (which was I hadn't considered). Given that, I am wondering why my bank would ever allow an employee to notarize a legal document such as a POA?

Are any of the employees at your banks notaries? If so, would you ever allow them to notarize a legal document such as a POA?

In retrospect this act seems somewhat risky!

I am not familiar with all states' laws about attestation clause but I have not yet found one where the notary's attestation clause includes language that the notary declares the principal was mentally competent or understood the legal consequences of signing the power of attorney.
Only a doctor can make that decision.
A notary simply attests to the fact that the signer is truly the person that sign the power of attorney. Obviously, the notary stamp helps to defeat a later argument by the principal that he/she did not sign the power of attorney.
In your case you still need to review your state law to determine if a power of attorney needs to be notarized in order to be valid.
Assuming your state law requires the principal's signature be notarized on a power of attorney, all is not lost with the power of attorneys that have not been notarized.
If the principal wants to argue that the attorney-in-fact did not have authority to transact business on the bank account (and make a demand that your bank return the $), you need to argue the legal principles of estoppel and ratification (also look at UCC Section 3402 on the effectiveness of the signatures of representatives on instruments).

Excellent thoughts and I will follow-up for sure on your suggestions.

Though I am only in the early stages of research, I did note the following from the website of MailBoxesETC (not much of an authority but a starting point):
"Purpose of Notary - Our laws consider certain instruments of such importance that they must be signed by a maker in the presence of a Notary Public, the purpose of which is to prevent Fraud & Forgery. The Notary's primary duty is to demonstrate that the signer of the document understands what he/she is signing and to declare that the signer's identity and signature are genuine".

As noted, that website falls far far short of compelling, but hopefully by following the leads you good learned folks have provided, I will be able to conclude on this matter.

I have said it before and its worth repeating now...I love BOL!

THANKS

I found some additional info at the Maryland Office of Secretary of State website (more reliable than those MailBoxEtc folks). In regard to Notary Duties and Responsibilities the following is noted:

Part IV
25. Before notarizing a document, should a notary make any observations about the person signing the document?
Before notarizing a document, a notary should observe whether the person signing is alert, and under no apparent duress or undue emotional or intoxicating influence. If the person signing the document does not appear alert, or appears to be under duress or undue emotional or intoxicating influence, the notary should DECLINE to notarize the document.

This seems to allow for the possibility that in a subsequent dispute that a person could argue that a the notary failed to act properly is deciding to notarize a document. This MIGHT create liability.

If you want good, solid information on Notaries Public for all states, and the purposes of acknowledgements and jurats, you can contact the National Notary Association.

Quote:

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A notary simply attests to the fact that the signer is truly the person that sign the power of attorney.

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Many people feel that being a notary, or using a notary, means that the notary "watches you sign" and takes ID to prove that the signer is who they say they are.

A notary actually has other duties, including the responsibality to determine if the person standing before them is able to sign. The ability to sign can be decerned from the person's ability to attest to their understanding of the document they are signing. The majority of notary requests include the language on the form of the attestation. The notary should ask the person signing to read that attestation outloud and should note that this was completed in their notary book. The new books even have a place for the person to sign agreeing they made the attestation. (I'm making that word up I think).

When I worked at a major financial institution the bank decided to pull back on it's notary services. We only notarized bank documents (ie loan docs or specified account POA's.). We quit doing wills, divorces, etc because of the liability. And the liability isn't necessarily held to the bank alone. A US Bank employee lost her home because of a bad notary she did on a bid that caused a business to lose the bid.

Most smaller banks still provide this service to their clients, but many of their staff don't understand the implications of being a notary. I think it's one of the worst misconceptions out there. You're not just watching someone sign a document. There is much more to it.

It's all about proper training, and the bank understanding the risks if they're going to allow their staff to preform this customer service beyond bank documents.

Let me specifically refer to California law. The purpose and form of a notary's acknowledgement is found in Civil Code Sections 1185-1189. Nothing is said in those sections that the notary is attesting to the mental capacity of the document signer.
The issue of mental capacity is a legal issue as far as the enforceability of a document. That decision is ultimately determined by a court of law when mental capacity becomes an issue.
This is not to say that the notary shouldn't exercise some caution before notarizing a document. A notary can certainly be drawn into litigation as to whether the notary really saw the person sign the document or the manner in which the signing person was acting.
If Alaska provides that the notary is also making a legal judgment as to the mental capacity of the signer then I agree with your bank's decision not to have its employees notarize documents.
As a practical matter, many loan documents are signed in branches and some of the documents require the signature to be notarized. If the bank does not have a notary employee then the bank needs to bring in a notary to have the documents signed (extra expense) or hire some loan closer to go the customer. My experience is that until a bank finds out that one of its notary employees has done something to expose the bank to liability that customer service requirements dictate the need for having notary employees.

I'm sorry, it's a fine line I'm trying to explain. You're not forming an opinion of a person's mental capacity, only their ability to attest to their signature (if that's the type of notary service you're preforming). If the person in front of you is slurring and drunk, a good notary would not feel they had the capicity to attest to their understanding of the document and would not notarize it. If they're sitting there with Jr who has a gun to their head, again, it should not be notarized by any decent notary. You're not giving a mental exam, but you are making a judgemental decision that the person attesting to understand what they're signing can do so in their current condition.

The bank in question is a large national firm. They made this rule throughout their bank. The notary publics in the branches notarize bank documents, but nothing else. Bank documents would include loan papers, some deposit agreements (limited POA's on occasion that are related to the bank's accounts). But no wills, divorces, etc.

Also, remember that a notary is acting as an individual and in some states the law provides that: When a notary performs notarial acts in the scope of his or her employment, his or her employer may require the notary to provide the service without charge. However, the employer cannot require the notary to charge a fee and pass all or part of it on to the employer.

I agree with Ray, state law is wholly determinative as to what it necessary to create a valid power of attorney. Notarization is a very good practice, but is oftentimes required only on a "durable" power of attorney.

It's the height of irony that, normally, only lawyers are capable of attesting to a person's mental capacity. It's a conclusion most doctor's are normally unwilling to draw, but lawyers think nothing of it. However, only to illustrate the diversity which state legislatures exhibit, the Florida POA statute allows a "springing" power of attorney to take effect if a doctor certifies the principal "lacks the power to manage property."

Having once been a Notary (I was 19 years old at the time) I find it a very scary thought that people would place so much faith that a mere Notary (and I don't mean that as a slur on Notaries) would have the ability to really determine mental capacity.

I don't know how it is now, but I remember getting a lot of pressure from bosses who would want me to Notarize something in order to "get the deal done." Considering that the many people who become Notaries in a bank do so because their boss told them they needed to become a Notary, it is difficult to imagine the number of Notaries who are "coerced" into Notarizing something that wasn't entirely "kosher."

Happiest day of my life was when that commission expired!

By the bye - in California at least, the only way a Notary Public can become "private" and only notarize bank documents is if the Notary truly ONLY notarizes bank documents. If a Notary starts to also notarize bank customer documents that aren't related to bank business, then the Notary becomes "public" again, and must provide Notary services to anyone, bank customer or not.

Consumer question on POA moved to "Ask a Banker" forum.