Statement of Authority: Holding and Conveying Real Property in Colorado
Running a business is extremely difficult. Adding legal jargon and understanding who can do what for a business complicates things even more. This blog is meant to help business owners and holders of trusts understand the importance of a Statement of Authority without getting too lost in the weeds.
What is a Statement of Authority in Colorado?
A Statement of Authority vests an individual with unambiguous authority to convey real property on behalf of an entity, or to convey real or personal property on behalf of a trust. Under Colorado law, an entity includes any corporation, government or governmental subdivision or agency, business trust, estate, trust, limited liability company, partnership, association, or other legal entity. Entities and trusts are allowed to hold and convey real property in the entity or trust name in Colorado, which is helpful for business versatility and estate planning.
Why do I need a Statement of Authority?
The statement demonstrates the signatory is authorized to sign for the entity or trust who is transferring real property. The statement of authority can be relied on by third parties as assurance that the transaction was authorized by the entity or trust. Absent the Statement of Authority, issues could arise as to whether the entity or trust authorized the transaction or whether the signatory was empowered to sign for the entity or trust.
What must be included in a Statement of Authority?
A Statement of Authority must contain: (1) the name of the entity; (2) the type of entity and the state, county, or other governmental authority under whose law it was formed; (3) a mailing address for the entity; and (4) the name or position of the person authorized to execute instruments conveying, encumbering, or otherwise affecting title to real property on behalf of the entity.
The Statement of Authority should also contain any limitations that may exist upon the authority of the named individual to bind the entity. This also includes other matters involving how the entity deals with any interest in real property. Upon recording a statement of authority, a title entity has reasonable assurances that the person executing the real estate documents has authority to do so on behalf of the entity.
How do you file a Statement of Authority?
A Statement of Authority should be filed with the County Clerk and recorder of the county at the time of conveyance of an interest in real estate as a means of establishing in the title records who has authority to execute a deed or other instrument conveying an interest in real estate. The statement of authority must also be notarized by a registered public notary. This acknowledgement is a formal declaration before an authorized court or public officer (e.g., a notary public) that the person who has executed the instrument is doing so as their act or deed. The purpose of an acknowledgement (i.e., notarization) is to prove execution of the conveyance, to insure its authenticity when presented for registration. This enables the instrument to be used in evidence without proof of its execution by the grantor.
Conclusion:
A Statement of Authority is the first step for legal entities and trusts to begin holding and conveying real property with clarity and ease. It is one of the safest ways to bind an entity under Colorado law. If you are considering holding or conveying real property in a legal entity’s name or through a trust, fill out an interest form to see if GLO can help you.
GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation, and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific fee arrangements and signed engagement letters. GLO does not guarantee any results.