Statement of Authority: Holding and Conveying Real Property in Colorado
Running a business is already difficult to manage as it is, adding legal jargon and trying to understand who can do what for a business complicates things even more. This blog is intended to help business owners and holders of trusts understand a Statement of Authority without getting things misconstrued and confused.
What is a Statement of Authority & Why You Need it
A Statement of Authority grants an individual authority to represent an entity in conveying real property, or to represent a trust in conveying real or personal property. 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.
The Statement of Authority serves as a reliable assurance that the signatory is authorized to sign on behalf of the entity or trust transferring real property. Without this statement, third parties may question whether the transaction was authorized by the entity or trust or whether the signatory had the necessary authority to act on its behalf.
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 include any limitations on the named individual’s authority to bind the entity. This includes other matters related to how the entity handles any interest in real property. When a title entity records a Statement of Authority, it has reasonable assurance that the person executing the real estate documents has the authority to do so on behalf of the entity.
How To File a Statement of Authority
A Statement of Authority— filed with the County Clerk and Recorder at the time of conveying an interest in real estate— establishes the authority of the person executing a deed or other instrument conveying an interest in real estate. Notarization by a registered public notary is mandatory. This formal declaration before an authorized court or public officer (such as a notary public) affirms that the person executing the instrument is acting or doing so as their own. The primary purpose of notarization is to prove the execution of the conveyance and ensure its authenticity when presented for registration. This allows the instrument to be used as evidence without the need for proof of its execution by the grantor.
How GLO Can Help
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, consult with GLO!
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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 signed fee agreements. GLO does not guarantee any results.
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