Understanding the Uniform Power of Attorney Act for Michigan Real Estate Attorneys

Jan 10, 2024 | Articles, News


Public Act No. 187, adopted on November 7, 2023, establishes the Uniform Power of Attorney Act in Michigan, and takes effect July 1, 2024. The Act provides a structured approach to the creation and use of powers of attorney (POA). The following is a summary of its key provisions:


Agent Authority and Responsibility

The Act clarifies that a POA is durable unless explicitly stated otherwise, meaning it remains effective despite the principal’s incapacitation. This provision ensures continuity in managing real estate affairs, which is important for ongoing transactions or long-term property management. Agents are empowered to make critical decisions regarding real estate, encompassing purchasing, managing, and selling properties.

The Act imposes strict fiduciary duties on agents. They are required to act in the principal’s best interest, manage assets prudently, and avoid conflicts of interest. Agents must make informed decisions based on the principal’s known expectations or, if unknown, act in what they believe to be the principal’s best interest. Agents must adhere strictly to the principal’s instructions and cannot act beyond their authorized powers.

Agents are entitled to reasonable compensation and must keep accurate records of their actions.

Execution Requirements

A POA must be signed by the principal or a designated individual in the principal’s conscious presence. For durability, it must be acknowledged before a notary or signed in the presence of two witnesses.

How a POA is Terminated

POAs can be terminated in several ways: the principal may revoke it at any time; it ends automatically upon the occurrence of a specified event or condition; or when its specific, limited purpose is accomplished. Termination also occurs if the agent’s authority is revoked, or if the agent dies, becomes incapacitated, resigns, and no successor is named. Additionally, the agent’s authority ceases upon principal’s revocation, agent’s death, incapacity, resignation, or certain legal actions in marital relations, unless stated otherwise. Importantly, actions taken by an agent unaware of the termination still bind the principal, and for non-durable POAs, the principal’s incapacity does not automatically terminate the POA if the agent is unaware of this change.

Specific Authorities and Limitations

Certain powers must be explicitly granted in the POA for an agent to exercise them. These include creating, amending, or revoking trusts, making gifts, creating or changing rights of survivorship or beneficiary designations, and managing certain types of financial accounts, particularly in foreign countries.

Recognition of Out-of-State POAs

The Act acknowledges the validity of POAs executed outside of Michigan, provided they comply with the legal requirements of the state of execution or Michigan law.

Liability for Violations

Agents who violate the terms of the Act or the POA can be held liable for damages resulting from their actions. This includes scenarios where agents overstep their authority or fail to fulfill their fiduciary duties. The penalties include financial restitution and potential criminal charges in cases of abuse or fraud.

When an acknowledged power of attorney is presented, a person must accept it or request additional verification within seven business days. Acceptance is required within five business days of receiving this verification. Refusal is allowed in specific circumstances like inconsistency with federal law, knowledge of power termination, refusal of verification, good faith doubts about validity, reports of abuse to Adult Protective Services, or financial institution regulations. Unjustified refusal incurs court-mandated acceptance and liability for legal fees.

Statutory Form

Section 301 includes a statutory form template for creating a POA.

Overall, the Act outlines clear guidelines for the creation, execution, and termination of POAs, delineates the responsibilities and limitations of agents, and recognizes POAs executed in other states. Most importantly, the UPOAA applies to all POAs, even those executed prior to July 1, 2024.

Reprinted with permission from the Michigan State Bar – Real Property Law Section.