Who Must Sign What?

One of the most common mistakes that sellers and Realtors make is having the wrong people sign documents.  This can cause major problems, liability, or the loss of a Realtor’s commission. Sellers and Realtors often sign incorrectly because they don’t realize who really owns the property, who can sign on behalf of entities or estates, and who must sign.

It is important that Realtors and their Sellers understand exactly who must sign documents. The following is a brief summary of scenarios and rules in Wisconsin.  For more detailed discussion and answers, contact Homestead Title.

First, all sellers must sign all “conveyance” documents.  This means they must sign the deed and closing documents and they also must sign the offer to purchase and other contract documents.

Multiple Owners

If multiple people own the property, they ALL must sign the offer to purchase and all closing documents. It is not uncommon for sellers or their Realtors to cut-corners an allow only one owner to sign the offer, intending that the others will sign at closing.  An offer to purchase is not valid and enforceable if only some of the owners sign.  A Seller could be stuck with an unenforceable contract and Realtors risk violating their ethical and statutory duties by not assuring that all owners sign.

Trusts

If a property is owned by a trust, the trustee(s) must sign.  The Trust agreement will name the trustees and determine exactly who must sign.  A trustee can almost never delegate their authority either informally or by power of attorney.  Trust agreements rarely allow delegation or power of attorney signatures.

 Corporations or LLCs

Property owned by Corporation or LLC requires the signature of an authorized representative.  In each case, that will be determined by the corporate documents or agreements.  For most corporations, the president, secretary, or other officer can sign.  LLC’s must sign documents by either a manager or managing member(s).  The LLC Operating Agreement will determine which person must sign.  As with Trusts, it is almost never acceptable to delegate signing duties by power of attorney.

Deceased Individuals

When a property owner dies, it is critical to determine who must sign any sale documents.  Some properties are owned with “survivorship rights,” meaning that the deceased person’s property rights automatically transfer to another person (usually a spouse).  In other cases, the deceased person’s interest must be conveyed by a person appointed by the probate court.  In those cases, the court must appoint a personal representative or special administrator who has the authority to convey the property on behalf of the deceased person’s estate.  When addressing the sale of a deceased person’s property, it is wise to consult with a title company and/or attorney.

Married Couples

Under Wisconsin law, property that is solely owned by one spouse as a “homestead” or residence, cannot be sold without the other spouse’s signature.  This is called the “alienation of homestead rights.”  Both spouses must sign even if (a) the other spouse has never owned the property, (b) there is a marital agreement, or (c) there is a pending divorce.  When parties are selling a house in which either spouse lives as a residence, they almost always need both spouses to sign the deed and offer to purchase.

Power of Attorney

A power of attorney is a document that allows one person to sign on behalf of another.  This document must be approved by the title company and buyer’s lender and can only be used for living, individual people.  A power of attorney cannot be used for a dead person and can almost never be used for a trust, corporation, or other legal entity.

Guardianship

A guardianship exists when a court determines that someone is unable or incapable of making decisions or handling their own affairs.  The Court appoints a guardian to oversee the affairs of that person, known as the ward.  The ward cannot sign contracts or documents and all documents must be signed only by the Guardian.  In addition, the court will need to approve any sale, including its specific terms.  A commission agreement or offer to purchase signed by a ward that is subject to a guardianship is void and unenforceable.

Each of these topics are subject to in-depth analysis, rules, and occasional exceptions.  Attorney Peter Zarov is available to discuss these and often teaches courses to Realtors and Brokerages on proper signatories and assuring avoiding the consequences of having the wrong person sign.  Please contact us for information on courses and materials.