New York Simplifies Requirements for Powers of Attorney Used in Business and Commercial Matters
On August 13, 2010, New York State laws were amended to clarify that powers of attorney executed by individuals in New York primarily for a business or commercial purpose need not comply with the onerous requirements that went into effect on September 1, 2009. Following the 2009 amendments, the New York General Obligations Laws technically required all powers of attorney executed by individuals within the State of New York (including those used in corporate transactions and securities filings) to comply with mandatory notice, acknowledgement and notarization provisions and certain other technical matters.
The 2010 amendments expressly provide that the requirements for powers of attorney set forth in the 2009 amendments will not apply to:
- a power of attorney given primarily for a business or commercial purpose, including without limitation:
- a power to the extent it is coupled with an interest in the subject of the power;
- a power given to or for the benefit of a creditor in connection with a loan or other credit transaction;
- a power given to facilitate the transfer or disposition of one or more specific stocks, bonds or other assets, whether real, personal, tangible or intangible;
- a proxy or other delegation to exercise voting rights or management rights with respect to an entity;
- a power created on a form prescribed by a government or governmental subdivision, agency or instrumentality for a governmental purpose;
- a power authorizing a third party to prepare, execute, deliver, submit and/or file a document or instrument with a government or governmental subdivision, agency or instrumentality or other third party;
- a power authorizing a financial institution or employee of a financial institution to take action relating to an account in which the financial institution holds cash, securities, commodities or other financial assets on behalf of the person giving the power;
- a power given by an individual who is or is seeking to become a director, officer, shareholder, employee, partner, limited partner, member, unit owner or manager of a corporation, partnership, limited liability company, condominium or other legal or commercial entity in his or her capacity as such;
- a power contained in a partnership agreement, limited liability company operating agreement, declaration of trust, declaration of condominium, condominium bylaws, condominium offering plan or other agreement or instrument governing the internal affairs of an entity authorizing a director, officer, shareholder, employee, partner, limited partner, member, unit owner, manager or other person to take lawful action relating to such entity;
- a power given to a condominium managing agent to take action in connection with the use, management and operation of a condominium unit;
- a power given to a licensed real estate broker to take action in connection with a listing of real property, mortgage loan, lease or management agreement;
- a power authorizing acceptance of service of process on behalf of the principal; and
- a power created pursuant to authorization provided by a federal or state statute, other than this title, that specifically contemplates creation of the power, including without limitation a power to make health care decisions or decisions involving the disposition of remains.
The 2010 amendments are effective on September 12, 2010, and will apply retroactively to September 1, 2009.
The 2010 amendments contain other modifications to the New York power of attorney laws which are not all summarized herein. A copy of the 2010 amendments is available at http://assembly.state.ny.us/leg/?default_fld=&bn=A08392%09%09&Summary=Y&Text=Y.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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