A General Power of Attorney (GPA), one person can manage another person's property and make financial and legal decisions on their behalf.
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Using a General Power of Attorney (GPA), one person can manage another person's property and make financial and legal decisions on their behalf. But is using the general power of attorney to purchase real estate safe? When necessary, may this document be cancelled in court?
Homebuyers must take into account all subtleties when purchasing a house, thus analysing elements of purchasing a property based on general power of attorney.
In Indian real estate, using a General Power of Attorney (GPA) to purchase a property is a frequent practice. But according to a 2011 Supreme Court of India ruling, it is illegal to transfer property through a power of attorney.
However, since sellers are typically in a desperate need to sell their property, what really draws homebuyers is the lucrative offer that goes with this method of buying a home.
Homebuyers must thus thoroughly research the security of such transactions before signing on the dotted line and completely understand all the subtleties of purchasing a property through the general power of attorney.
General Power of Attorney: What is it?
A person can authorize a friend to do certain financial or legal transactions on his or her behalf. It is a typical practice in situations where the original owner cannot physically be present, such as when dealing with NRIs or incapacitated proprietors. They entrust a reliable individual with the authority to conduct business on their behalf with the power of attorney in this instance.
Applications of a General Power of Attorney
Managing property matters on behalf of the owner
Managing finances on behalf of the main (the person issuing the general power of attorney)
In order to look after the principal's medical needs
For implementing the "as and what" specified in the power of attorney deed
Do you have to enter your power of attorney?
For legal validity, a general power of attorney must be registered with the Sub-Registrar Office (SRO). Additionally, the power of attorney has a limited shelf life. It is enforceable for as long as the principle is alive and may be revoked at any moment throughout the owner's lifetime. On the other hand, the Special Power of Attorney (SPA) is removed after the particular duty that it was given authority to do is finished.
Real estate sector power of attorney
Going through the general power of attorney method for land acquisition is often not advised given the legal complexities involved. However, it was common in India since it gave both the buyer and the seller financial advantages.
The buyer is required by law to pay stamp duty and registration fees to the government if the title to a property parcel is transferred. The transaction's capital gains tax will also fall on the seller. These fees are avoided when the property is transferred through a power of attorney, which results in a significant loss to the government coffers.
Can someone who has power of attorney register to sell a house?
A general power of attorney holder is not permitted to sell the property on the owner's behalf, even when they have registered their power of attorney with the SRO. The Supreme Court of India's 2011 decision emphasized this point and disallowed the sale of property through power of attorney. The only responsibilities that a general power of attorney holder may complete are those the owner has delegated to them; selling property is not one of those tasks.
What should you do if you purchased a property through the power of attorney?
Due to the lack of a recorded sale transaction, if you purchased a property through a general power of attorney, you will not be regarded as the property's legal owner. Additionally, you won't be able to sell the house without the sale deed. In addition, banks have a rule that they won't fund projects requiring a power of attorney.
While purchasing a property through a power of attorney may appear to be a lucrative arrangement, there may be underlying issues that the buyer is unaware of.
As a result, it is advisable to have a legal professional assist you to understand the small print of a general power of attorney before you sign any property paperwork.
You can also hire a lawyer at insaaf99.com to get the power of attorney drafting services.
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