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Amendments to PA Law Enhance the Ability to Rely on Powers of Attorney



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The Pennsylvania General Assembly passed House Bill 1429 amending Pennsylvania’s law on powers of attorney (20 Pa.C.S. §§ 5601-5612), which was signed into law by Governor Tom Corbett on July 2, 2014 as Act 95 of 2014.  The provisions of Act 95 are of particular importance to third parties within the energy industry who regularly rely on powers of attorney (“POA”) to engage in financial and property transactions.  The provisions discussed below apply to POAs created before, on, or after July 2, 2014, but do not apply to the acts or omissions of agents, or third parties presented with instructions by agents, that occurred prior to July 2, 2014. [1]

The amendments operate, in part, to override the Pennsylvania Supreme Court’s decision in Vine v. Com., State Employees' Ret. Bd., 9 A.3d 1150 (Pa. 2010).  In Vine, the Plaintiff petitioned for review from an order denying relief regarding a retirement election made by her then-husband under a purported POA, obtained while she was mentally and physically incapacitated.  The POA was found to be void.  The Supreme Court held that a third party could not rely on a void POA submitted by an agent where the POA may be defective or void, even where the third party had no knowledge of invalidity.[2]

These amendments offer greater protection from civil liability for third parties acting in reliance on POAs.  Under amendment to Section 5608(c), a person who in good faith accepts a POA without actual knowledge that the signature or mark is not genuine may, without liability, rely upon the genuineness of the signature.[3]  To illustrate this expansion of immunities, in a situation where a company seeks to acquire an oil and gas lease or other written commitment from the agent acting for a principal under a purported POA, without actual knowledge of any invalidity, the company may accept the POA in good faith, without risk of civil liability.  This represents a significant, favorable change from prior policy.

The amendments to Sections 5608(e) and (g), however, create some concern for an entity dealing with an agent under a POA.  In such a case where a person is required to engage in a transaction with another, and a POA is tendered to confirm the authority of the agent to act for the principal, the first person is required to accept the POA within seven days, unless the first person requests the provision of certain identified forms of supporting documentation within the seven day period, and these are satisfactorily furnished. Under Section 5608.1(c) a person who refuses to accept a POA in violation of Section 5608 shall be subject to “[c]ivil liability for pecuniary harm to the economic interests of the principal proximately caused by the person’s refusal to comply with the instructions of the agent designated in the [POA]” and a court order mandating acceptance of the POA.[4] 

In application, a prospective oil and gas lessee would not be required to accept a purported POA, as the potential lessee is not otherwise required to enter into the lease.  However, in circumstances where there is an existing relationship between the lessor and lessee, the lessee may be required to accept the POA, to honor an instruction to change the royalty payee. 

The provisions pertinent to the obligation to accept a power presented, and liability arising for failure to do so, outlined in Sections 5601(f), 5608, 5608.1, and 5608.2, as well as the provisions outlined in Sections 5611 and 5612 became effective on July 2, 2014.  All other amendments shall take effect on January 1, 2015. [5]

[1]  PA LEGIS 2014-95, 2014 Pa. Legis. Serv. Act 2014-95 (H.B. 1429) (PURDON'S).
      See also Power of Attorney – PEF Code Amendments, Fiduciary Review, August 2014, at 1, 3-4.

[2]  Vine v. Com., State Employees' Ret. Bd., 607 Pa. 648, 9 A.3d 1150  (2010).  

[3]  PA LEGIS 2014-95, 2014 Pa. Legis. Serv. Act 2014-95 (H.B. 1429) (PURDON'S).

[4]  Id. See also Raymond Pepe, Important Changes Enacted to Pennsylvania’s Power of Attorney Law,
     PA Bankers Association, June 26, 2014,

[5]  PA LEGIS 2014-95, 2014 Pa. Legis. Serv. Act 2014-95 (H.B. 1429) (PURDON'S).
      See also Power of Attorney – PEF Code Amendments, Fiduciary Review, August 2014, at 1, 3-4.