We have a potential business customer that performs property repairs. The customer would like to deposit checks issued by insurance companies for the property repairs. The checks are payable jointly to the business and the homeowner. The business obtains limited power of attorney (POA) documents from the homeowners authorizing it to endorse and deposit the checks. Can we rely on the POA for these deposits, without the homeowner’s endorsement? Should the POA be notarized? Should the business endorse as power of attorney for the homeowner?

Yes, your bank may rely on a power of attorney document that grants your business customer the authority to endorse a check on a homeowner’s behalf. In fact, the Illinois Power of Attorney Act requires you to comply with an agent’s directions that are in accordance with the agent’s POA document, “and any person who fails to comply arbitrarily or without reasonable cause shall be subject to civil liability for any damages resulting from noncompliance.”

As an added layer of protection for your bank, you can ask your business customer to fill out and sign a “Certification and Acceptance of Authority,” using the form provided in the Illinois Power of Attorney Act (which we link to below).

The POA document should be both notarized and witnessed. Also, because the checks are payable to both the business and the homeowner, these checks should be deposited with two endorsements: one on behalf of the business customer, and the second on behalf of the homeowner (even if it’s the business customer signing on behalf of the homeowner pursuant to the POA).

For resources related to our guidance, please see:

Illinois Power of Attorney Act, 755 ILCS 45/2-8(a) (“Any person who acts in good faith reliance on a copy of a document purporting to establish an agency will be fully protected and released to the same extent as though the reliant had dealt directly with the named principal as a fully-competent person. The named agent shall furnish an affidavit or Agent’s Certification and Acceptance of Authority to the reliant on demand stating that the instrument relied on is a true copy of the agency and that, to the best of the named agent’s knowledge, the named principal is alive and the relevant powers of the named agent have not been altered or terminated; but good faith reliance on a document purporting to establish an agency will protect the reliant without the affidavit or Agent’s Certification and Acceptance of Authority.”)
Illinois Power of Attorney Act, 755 ILCS 45/2-8(d) (“Each person to whom a direction by the named agent in accordance with the terms of the copy of the document purporting to establish an agency is communicated shall comply with that direction, and any person who fails to comply arbitrarily or without reasonable cause shall be subject to civil liability for any damages resulting from noncompliance. A health care provider who complies with Section 4-7 shall not be deemed to have acted arbitrarily or without reasonable cause.”)
Illinois Power of Attorney Act, 755 ILCS 45/2-8(b) (Statutory form for Agent’s Certification and Acceptance of Authority.)
Illinois Power of Attorney Act, 755 ILCS 45/3-3.6 (“Every property power shall bear the signature of a witness to the signing of the agency and shall be notarized.”)
Illinois Power of Attorney Act, 755 ILCS 45/3-3 (“Nonstatutory property powers . . . (iii) must be signed by at least one witness to the principal’s signature, and (iv) must indicate that the principal has acknowledged his or her signature before a notary public.”)
Uniform Commercial Code, 810 ILCS 5/3-110(d) (“If an instrument is payable to 2 or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to 2 or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to 2 or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.”)