Assignment vs. Power of Attorney: Choosing the Right Claim Method by State

Written for operators as of December 2025, not as legal advice. The rules described here change and are interpreted differently across jurisdictions. Have counsel confirm the instrument you plan to use in each state before you send it to a claimant.

The two instruments, side by side

How a limited power of attorney works

The claimant signs a document authorizing you to act for them in a narrowly defined matter: filing and prosecuting the surplus claim on a specific property. You submit the filing, you correspond with the reviewing office, and the funds are disbursed to the claimant, usually to an address or account named in the file. Your fee is paid from the proceeds under a separate written agreement.

It is the more conservative instrument and it is what we use by default. The claimant keeps ownership of the claim and can revoke the authority at any time, which is exactly the arrangement a regulator wants to see.

Where a power of attorney runs into trouble

• Foreclosure consultant statutes in several states expressly prohibit a consultant from taking a power of attorney from a homeowner.
• Some reviewing offices will not accept a power of attorney from a non-attorney at all, treating the filing as the unauthorized practice of law.
• Form requirements vary. A general durable power of attorney is frequently rejected where a matter-specific instrument naming the property and the sale is required.
• Notarization and witness requirements differ, and a defect discovered after filing costs weeks.

How an assignment works

The claimant sells their right to the surplus. You pay them an agreed amount, often immediately, and you then pursue the claim in your own name and keep whatever is recovered. The economics are different in kind from a contingency, because you have taken on the risk that the claim fails, that a lien surfaces, or that the amount is smaller than the record suggested.

Assignments appeal to claimants who want certainty and cash now rather than a percentage in six months. They appeal to firms with capital and a tolerance for file-level risk. They also attract the most regulatory attention, because the structure allows a large spread on a person who does not know what their claim is worth.

Where assignments are restricted

• Several states prohibit the assignment of a right to tax sale surplus, either outright or within a waiting period after the sale.
• Where a fee cap applies, the discount on an assignment is generally measured against that cap. Buying a $50,000 claim for $20,000 in a 20 percent state is a $30,000 fee in substance.
• Foreclosure consultant statutes that bar acquiring an interest in the residence may reach an assignment of proceeds derived from it.
• Some reviewing offices require the original owner to appear or verify regardless of the assignment, which removes much of its practical benefit.

A decision sequence

1. 1Identify the state where the property sold. Its rules govern the instrument.
2. 2Determine whether a non-attorney may file at all. If not, the question is which attorney you partner with, not which form you use.
3. 3Check whether assignment of surplus is permitted, prohibited, or subject to a waiting period.
4. 4Check whether a foreclosure consultant statute bars taking a power of attorney.
5. 5Check the fee cap and measure your intended structure against it in dollars, not in labels.
6. 6Confirm the reviewing office's accepted form for whichever instrument survives the first five steps.
7. 7Default to a limited power of attorney whenever both instruments are available.

Why we default to the power of attorney

Three reasons, and none of them are about maximizing per-file revenue.

The first is that it survives a change in the rules. A contingency arrangement where the claimant remains the claimant is defensible under almost any framework a legislature might adopt. An assignment structure can be invalidated by a single amendment, and invalidation reaches files you closed years ago.

The second is that it is easier to explain honestly. A claimant can understand that they keep the claim, that we get paid only if money arrives, and that they can fire us. Explaining an assignment fairly requires telling someone the estimated value of what they are selling, which is the exact information that makes them not want to sell it at a discount.

The third is practical. Reviewing offices are used to owners claiming their own money with representation. An unfamiliar structure invites scrutiny, and scrutiny costs months on a claim that has a deadline.

Drafting details that decide whether a filing is accepted

• Identify the property by parcel identifier and by address, and identify the sale by date and case or file reference.
• State the scope narrowly. Authority to file and prosecute this claim, receive correspondence, and take related steps, and nothing further.
• Include an expiration date. An instrument with no end date reads as overreaching.
• Match the claimant's name exactly to the deed of record, and attach the documents that bridge any name change.
• Meet the notarization and witness requirements of the state where the filing lands, not where the claimant signs.
• Keep the fee agreement as a separate document from the authority instrument, so a challenge to one does not automatically reach the other.

When an attorney is the answer

In states that bar non-attorneys from pursuing a claim for another party, no form solves the problem. The workable structure is a referral or co-counsel relationship with a licensed attorney in that state, with the attorney appearing on the claim and the fee arrangement conforming to the professional conduct rules that apply to them.

Firms that try to route around this with a creative document tend to discover that unauthorized practice of law carries penalties independent of anything in the recovery statute.

If you are weighing this for a specific state and want to talk it through, we are at (888) 545-8007.