As was true under prior law, all businesses that receive a statutory POA form must accept it unless the business has a good reason. Under the new law, businesses can be penalized for unjustified refusals. As a trade-off that I negotiated, if a POA appears on its face to be properly signed, witnessed and notarized, a business is protected even though the POA was forged, unless there is actual knowledge that the POA is invalid.

As your business implements the new law, adopt procedures to do two things: (1) take advantage of the provisions designed to protect recipients of POAs and (2) make sure to give notice of your reasons for rejection within 10 business days after you receive a POA if you decide to refuse it. Please remember, when evaluating whether to accept a POA, that the fact that you may have the right to reject it does not mean that you have to reject it. If your risk assessment results in a conclusion that the are no material risks in accepting the POA, and you want to accept it, then go ahead and do so.

You are only required to accept a POA that substantially complies with the New York Statutory Short Form. For example, you may reject a California POA that is not substantially similar to the New York form for that reason alone. 
If you reject a POA without a good reason, you may be liable for damages for wrongful rejection. If you decide to reject a POA, you must send a notice of rejection within 10 business days. 

We recommend the following precautions.

• Train employees and vendors (like lawyers and managing agents who may receive POAs while acting on your behalf) on how you want them to handle POAs. You have only 10 business days to accept or reject, so “I’ll get to it next week” is a bad plan.
   
• The person who gave you the POA has the right to present documents or other information to cure the reasons stated in your notice. There is no time period during which the agent must respond to a notice of rejection. However, you have only seven business days after receiving the supposed “cure” to either accept the POA or issue a final rejection. If the agent fails to provide documents and information necessary to cure all problems, or provides an inadequate response, then you should notify the agent that the rejection is final.
   
• How long should you wait to send a final rejection notice if you get nothing from the agent? The law does not say. It will depend on the facts. I recommend that you decide what is a reasonable time based upon the reasons for rejection, send a warning to the agent that you will issue a final rejection notice if proof is not presented within X days (seven business days should be a safe warning period unless there are unusual reasons for rejection), and then issue a final rejection notice if the problems are not cured.
   
• ​When a POA is presented the first time, make sure that you get contact information for the principal, the agent and any attorney involved in the transaction.

When you are evaluating whether to accept an act on a POA, do not start with the presumption that you should reject it. The law provides significant protections for businesses that elect to accept a POA. Therefore, your approach to the decision-making, which must be conducted in good faith, should start with a neutral view, favoring neither acceptance nor rejection. 

So long as you act in good faith in deciding to accept a POA, and you have no actual knowledge that the POA is invalid, you may rely on a POA that appears to be signed, witnessed and notarized. This is permitted even though, with 20-20 hindsight, it turns out that the POA is forged or not in effect. This shifts the risk of forgery or undue influence away from the business as recipient of the POA.

A business should not accept a POA if it has actual knowledge or a reasonable basis to believe that (i) a report has been made to a government agency alleging elder abuse; (ii) the principal has died; (iii) the principal is incapacitated, unless the POA provides that it survives disability (most POAs survive disability); (iv) the principal was incapacitated at the time the POA was executed; or (v) the POA was procured through fraud, duress or undue influence. 

In addition, do not accept a POA if you have actual knowledge that it is forged or otherwise improperly executed. Be alert. Some stories border on the comic. In one case, an agent insisted that a bank accept a POA because the principal had been in a coma for months. However, the POA was forged, as evidenced by the fact that it was signed and notarized only a week before.

The Short Form Power of Attorney statute is far from short itself, and it contains many complexities. This blog addresses only one issue – the mandatory acceptance requirement – and does not touch upon many other issues regarding POAs, such as those related to using POAs as part of an estate plan. If you have any questions regarding powers of attorney or the obligation to accept them, please contact Jay L. Hack, Esq. at jlh@gdblaw.com at Gallet Dreyer & Berkey, LLP, 845 Third Avenue, New York, NY.