Lately there have been an increasing number of cases in our practice in which general representatives want or have to act, but they run out of copies of the power of attorney on the basis of which they are allowed to do so. This can lead to complete inability to act in any direction with the consequence of considerable financial risks for the principal.
Normally you would ask the principal to simply sign a new power of attorney and then you have another. However, this does not work if the principal has become legally incapable in the meantime. A common case is senile dementia. A common constellation is that one parent transferred ownership of one or more properties to the offspring during their lifetime, but reserved the usufruct in order to continue to live in it and / or to continue to earn income (= pension) from it. The children as owners often receive a general power of attorney in the event that the transferring parent becomes demented / incapable of doing business, so that his affairs can still be settled. Even without a usufruct constellation, we see such parent-child general powers. If there are no children or if the owner has a quarrel with them, a property manager or a lawyer may move into the position of trust and receive general power of attorney.
The German age pyramid suggests that the above-described situation is not an obsolete model but, on the contrary, will increasingly accompany us. The course must be set here BEFORE the principal became incapable of acting. This gives reason to lose a few basic words here in the blog about how to set up such a power of attorney correctly and for the future.
Where is the problem?
If you are acting for someone else on the basis of a power of attorney, you must in principle the original of the power of attorney submit. If this does not happen, the other side can reprimand and your action is ineffective. The legal basis for this evaluation is § 174 BGB. It reads:
Section 174 Unilateral legal transaction by an authorized representative
A unilateral legal transaction carried out by an authorized representative against another is ineffective if the authorized representative does not present a power of attorney and the other immediately rejects the legal transaction for this reason. ...
By “power of attorney” the law means the original. A copy is not enough. Unilateral legal transactions are, for example, terminations, rent increases, utility bills and warnings.
Let us assume that the owner of an apartment building has signed a lump sum of 10 general powers of attorney for his daughter in the event that he is unable to act. He later becomes demented and the daughter begins to act on his behalf. It is foreseeable: sooner or later the 10 original copies of the power of attorney will be used up. With regard to the property, an original of the power of attorney must be presented to each tenant at least once if a rejection of the relevant declaration - for example a rent increase - is to be avoided. If a tenant has successfully refused due to lack of power of attorney, word of this may get around in the house and further such refusals can be expected as a result. If all the originals of the power of attorney have been used up, a tenant who has not received one can basically stop paying: the daughter can then no longer effectively terminate the contract, because she can no longer effectively issue a declaration of termination by authorization, at least as long as the tenant always rejects a notice of termination due to a lack of power of attorney that was sent without an original power of attorney
This situation cannot be resolved with certainty by simply signing 10 instead of 100 copies. Because in what frequency and number of cases an external submission is necessary and how long the demented state of the principal will last is naturally unclear.
additional objection to the authenticity or effectiveness of the power of attorney
A privately issued power of attorney must also overcome two hurdles:
- In case of doubt, it must be proven that it originates from the principal, i.e. that it has not been signed by a third party.
- It can be objected against them that the principal was already demented / incapable of doing business when he signed them. In that case it would be ineffective.
We see the latter in particular when there is not too long a period between the date of issue and the later determination of the incapacity. “Not too long” can of course be more than a year from a medical point of view.
Parties argue over and over again about both objections. The signature by the principal himself can usually be proven at some point by a graphological report. It is more difficult to prove exactly when the principal signed this. There may be a date in the power of attorney. However, it cannot be ruled out that a demented power of attorney signed this with the wrong date. So how can you prove that the signature was made before he was demented?
If you ask a chemist, their answer might be that they cannot tell the exact age of the ink once it has passed a certain age, say half a year or a year. A paper expert may be able to determine how old the paper was signed on, but that doesn't necessarily tell you how old the signature on that paper is. A scribe can find clues in the typeface of the signature that the signer was demented when he gave it, if there are clear abnormalities and deviations from earlier signatures. What he is less able to do, however, is to confirm that the signatory has not yet been demented if the typeface does not show such abnormalities.
Now let's assume that you have to give notice to a tenant because he no longer pays, and during the evacuation process you argue with the help of the aforementioned experts about whether the original power of attorney for your declaration of notice was effective or not. This is not only very expensive, it also takes a long time and there is no rental income the whole time. Failure to pay by the tenant may mean missing. at the same time the money for such a process. And the loan installments on a property that has not yet been paid off must still be serviced continuously.
Can the problem be repaired with the last original copy afterwards?
No. Only an original fulfills the requirements of § 174 BGB. It doesn't help to go to the notary with this and have a certified copy made of it. This may have the notary's seal and be tied with string, but it still remains a copy, and copies are simply not enough.
What if you are already in the situation?
If there are no longer any original powers of attorney and you can therefore no longer act on behalf of the principal, you can apply to the local court to appoint a supervisor. It can be suggested that the previous authorized representative be appointed as supervisor. The court can follow this, but does not have to. In particular, if conflicts of interest are to be expected, the choice of the supervisor by the court may differ from the application made.
Reduction of the problems through notarial certification
You can resolve or at least mitigate the above-mentioned objections if the power of attorney is not only handwritten by the principal, but also if this signature is made in front of a notary, who then certifies it. The notarial certification means that two things are certain: a) that the signer was actually the principal and b) on which day he signed. However, certification does not certify that the signatory was not already demented. If there are obvious signs of this, the notary will reject the certification or at least include a corresponding note in his certification note. However, there are enough cases of undetected dementia that were present, but lacking sufficiently clear signs at the time of the notary's appointment.
A signature certification costs a small lump sum and increases legal security enormously. So there is no reason to refrain from doing anything as important as a general power of attorney.
However, this only applies to Signature certification. After this you have exactly a Power of attorney copy. If, on the other hand, you want to create 100 originals of power of attorney as a precaution, you would have to carry out 100 signature authentications. That costs a bit more in total. And you don't know whether the number of powers of attorney will be sufficient in the end.
In addition, it should be noted that the notary does not check the quality and content of the text that is signed in the case of a signature authentication (at least not as long as it is not to be entered in a public register). He does not advise here whether the power of attorney is sufficient in terms of content.
Notarial certification does not solve all the problems we have with general powers of attorney. How are you doing better?
The only way that is completely safe: notarial certification of the power of attorney
The signature of a notarized notarized Power of attorney for a certified one is that the notary reads out the power of attorney (as in a sales contract), checks the signatory's legal capacity by asking appropriate questions in the notarization, notes his impression in the power of attorney and then stores the original in his collection of documents. The notary can then issue as many “copies” of this original as required at any time and for as long as necessary.
These notarized copies replace the original in legal transactions, Section 47 BeurkG. If you have to attach a power of attorney to a notice of termination, do not use the original, but a notarized copy. This meets the requirements of Section 174 BGB. If you run out of copies, you can call the notary's office and ask the notary to make more copies for you. As a result, this means that you can never run out of powers, regardless of how long the principal's incapacity lasts.
This copy can only be issued by a notarized power of attorney, not by a merely certified signature.
The disadvantage is that the notarial certification triggers fees, which are calculated according to the business value of the power of attorney. So it costs more than a mere signature certification. Measured against the value that this approach has for the interests of the principal and those of his authorized representatives in an emergency, it is well invested, as our legal practice repeatedly shows.
In addition, of course, the notarial preparation also guarantees the quality of the content of the power of attorney. This leads to the expectation that less of the necessary regulatory content will be overlooked and then missing (e.g. an exemption from the restrictions of Section 181 BGB), or that more complicated asset structures, for example in the presence of company holdings, will still be included in such a way that not later for formal reasons Inability to act occurs in some areas.