Section 5-504
(a)
The death of a principal who has executed a written power of attorney, durable or otherwise, shall not revoke or terminate the agency as to the attorney in fact or other person, who, without actual knowledge of the death of the principal, acts in good faith under the power. Any action so taken, unless otherwise invalid or unenforceable, binds successors in interest of the principal.
(b)
The disability or incapacity of a principal who has previously executed a written power of attorney that is not a durable power shall not revoke or terminate the agency as to the attorney in fact or other person, who, without actual knowledge of the disability or incapacity of the principal, acts in good faith under the power. Any action so taken, unless otherwise invalid or unenforceable, binds the principal and his successors in interest.
(c)
No revocation by a principal under a written power of attorney, durable or otherwise, shall revoke or terminate the agency as to the attorney in fact or other person who, without actual knowledge of the revocation, acts in good faith under the power or relies in good faith on acts under the power. Any action so taken or relied upon, unless otherwise invalid or unenforceable, binds the principal and successors in interest of the principal. As to a person other than the attorney in fact, such person shall not be deemed to have actual knowledge unless the revocation is in a writing executed by the principal or a duly appointed personal representative of the principal and is actually received by such person or, in the case of transactions involving real estate or any interest therein, is recorded in due course as provided in section 25 of chapter 184.
Comment
Subsection (b), applicable only to nondurable powers that are controlled by the traditional view that a principal's loss of capacity ends the authority of his agents, embodies the substance of UPC § 5-502 (1969) (1975).
The discussion in the Committee of the Whole established that the language “or other person” in subsections (a) and (b) is intended to refer to persons who transact business with the attorney in fact under the authority conferred by the power. Consequently, persons in this category who act in good faith and without the actual knowledge described in the subsections are protected by the statute.
Also, there was discussion of possible conflict between the actual knowledge test here prescribed for protection of persons relying on the continuance of a power and constructive notice concepts under statutes governing the recording of instruments affecting real estate. The view was expressed in the Committee of the Whole that the recording statutes would continue to control since those statutes are specifically designed to encourage public recording of documents affecting land titles. It was also suggested that “good faith,” as required by this section, might be lacking in the unlikely case of one who, without actual knowledge of the principal's death or incompetency, accepted a conveyance executed by an attorney in fact without checking the public record where he would have found an instrument disclosing the principal's death or incompetency. If so, there would be no conflict between this act and recording statutes.
It is to be noted, also, that this section deals only with the effect of a principal's death or incompetency as a revocation of a power of attorney; it does not relate to an express revocation of a power or to the expiration of a power according to its terms. Further, since a durable power is not revoked by incapacity, the section's coverage of revocation of powers of attorney by the principal's incapacity is restricted to powers that are not durable. The only effect of the Act on rules governing express revocations of powers of attorney is as described in Section 5-505.
Massachusetts comment
This section differs from G.L. c. 201B, § 4 only as follows:
- Subsection (a)
- Line 2 - “does” changed to “shall”
- Line 5 - “the” changed to “such”
- Line 6 - “binds successors” changed to “shall bind a successor”
- Subsection (b)
- Line 2 - “does” changed to “shall”
- Line 6 - “binds” changed to “shall bind”
Chapter 140 of the Acts of 2012, § 50 added subsection (c). § 61 of the Act makes the addition applicable to transactions under powers of attorney occurring before, on or after the effective date of the Act, except with respect to a transaction that has been invalidated by a final decision of a court of competent jurisdiction prior to such effective date.