FACTS:                    

A competent seller accepts a purchase offer and signs the purchase contract.  During escrow, seller is involved in an accident that results in a brain injury that renders her unable to understand that executing the closing documents will result in the transfer of her property to the buyer.  Seller’s daughter obtains a durable power of attorney form purporting to allow the daughter to complete the sale of the property.  The power of attorney form is signed by the seller, notarized, and witnessed, all after the accident.

ISSUE:                      

Is the power of attorney valid?

ANSWER:                

No. 

DISCUSSION:         

By statute, to have the requisite competence to execute a valid power of attorney, “at the time the power of attorney was executed the principal was capable of understanding in a reasonable manner the nature and effect of the act of executing and granting the power of attorney.”  A.R.S. § 14-5506(D)(1).  For the same reason that the seller’s signature on the closing documents would be invalid, her signature on the power of attorney is invalid, i.e., she is not capable of understanding the effect of her signature on the document.  In this instance, the seller’s family or others may petition a court for the appointment of a guardian ad litem who can represent the interests of the seller and sign the closing documents on the seller’s behalf once a judge confers that power to the guardian.  This, of course, is likely to require a significant extension of the close of escrow date on the transaction.