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Home » Powers of Attorney » Can a Third Party Refuse to Honor an Agent’s Power of Attorney?

Can a Third Party Refuse to Honor an Agent’s Power of Attorney?

October 1, 2019 by Anthony Moccia

Harrison estate planning attorneysOne of the most well-known and commonly used estate planning tools is a Power of Attorney. There is a very good chance that at some point in your life you will execute a Power of Attorney (POA) and/or be named as an Agent in someone else’s POA. What happens though, if a third party refuses to honor a POA? The Harrison estate planning attorneys at the Law Offices of Kobrick & Moccia explain New York law regarding a third party’s refusal to honor an Agent’s authority under a Power of Attorney.

Power of Attorney Basics

A Power of Attorney is a legal document that allows you ( the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions.  The type and extent of the legal authority you grant to an Agent depends on the type of POA you create. A POA can be general or limited. A general POA grants your Agent almost unlimited power to act on your behalf in a wide variety of settings and under a wide variety of circumstances. A limited POA, on the other hand, only grants limited authority to your Agent. You decide what authority you want your Agent to have. Finally, both a general and a limited POA can be made durable. Making a POA durable simply means that the authority granted to the Agent survives the incapacity of the Principal.

Third Party Refusal

Despite the fact that a Power of Attorney is a very common and easily recognized legal document, a third party may still refuse to honor the Agent’s authority. New York law is fairly straight-forward with regard to a third party’s refusal though, stating as follows:

“No third party located or doing business in this state shall refuse, without reasonable cause, to honor a statutory short form power of attorney properly executed in accordance with section 5-1501B of this title, including a statutory short form power of attorney which is supplemented by a statutory gifts rider, or a statutory short form power of attorney properly executed in accordance with the laws in effect at the time of its execution.” (Section 5-1504)

The law goes on to define what conditions give rise to “reasonable cause”  which shall include, but not be limited to:

  • the refusal by the agent to provide an original power of attorney or a copy certified by an attorney pursuant to section twenty-one hundred five of the civil practice law and rules, or by a court or other government entity;
  • the third party’s good faith referral of the principal and the agent to the local adult protective services unit;
  • actual knowledge of a report having been made by any person to the local adult protective services unit alleging physical or financial abuse, neglect, exploitation or abandonment of the principal by the agent;
  • actual knowledge of the principal’s death or a reasonable basis for believing the principal has died;
  • actual knowledge of the incapacity of the principal or a reasonable basis for believing that the principal is incapacitated where the power of attorney tendered is a nondurable power of attorney;
  • actual knowledge or a reasonable basis for believing that the principal was incapacitated at the time the power of attorney was executed;
  • actual knowledge or a reasonable basis for believing that the power of attorney was procured through fraud, duress or undue influence;
  • actual notice, pursuant to subdivision three of this section, of the termination or revocation of the power of attorney; or
  • the refusal by a title insurance company to underwrite title insurance for a gift of real property made pursuant to a statutory gifts rider or non-statutory power of attorney that does not contain express instructions or purposes of the principal.

Furthermore, the same law goes on to state that it shall be deemed unreasonable for a third party to refuse to honor a Power of Attorney if the only reason for the refusal is any of the following frequently states reasons for refusal:

  • the power of attorney is not on a form prescribed by the third party to whom the power of attorney is presented.
  • there has been a lapse of time since the execution of the power of attorney.
  • on the face of the statutory short form power of attorney, there is a lapse of time between the date of acknowledgment of the signature of the principal and the date of acknowledgment of the signature of any agent.

Contact Harrison Estate Planning Attorneys

Please feel free to download our FREE estate planning worksheet. If you have additional questions or concerns about a third party’s refusal to honor an Agent’s authority under a Power of Attorney in the State of New York, contact the Harrison estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.

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Anthony Moccia
Anthony Moccia
Anthony Moccia is an attorney and partner at The Law Offices of Kobrick & Moccia.His practice focuses on estate planning and elder law.He is a member of the New York State and Nassau County Bar Associations.He frequently presents free seminars on wills & living trusts to area residents and his seminars are said to be “informative, entertaining & easy to understand.”
Anthony Moccia
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