New Precedent: Revocation of POA
In Tambunting, the plaintiffs’ father conveyed real estate to the plaintiffs’ brothers using POA’s, even though the brothers knew that the “that their father was without authority to effect the transfer.” The three-sentence decision relies on a literal reading of Real Property Law §326, which states that a recorded POA “is not deemed revoked by any act of the party by whom it was executed, unless the instrument containing such revocation is also recorded....”
Prior case law has generally allowed third parties to rely on a facially valid POA when there are no circumstances that would put a reasonable person on notice of revocation. There has even been a case where mere recordation of the revocation under §326 was held to be insufficient, when the third party lacked actual knowledge of the revocation. Parr v. Reiner, 143 A.D. 2d 427 (2nd Dept., 1988). Moreover, New York’s Statutory Short Form Power of Attorney explicitly recites that a revocation “is not effective as to a third party until the third party has actual notice or knowledge of the termination” (General Obligations Law §5-1513). In addition, GOL §5-1504 insulates third parties from liability for relying on a POA “unless the third party shall have received actual notice of the revocation....” Tambunting further insulates third parties to real estate transactions when the formality of a §326 recordation has not been observed.