Dear Sir/Ma'am,
Power of attorney is a written document in which one person known as The Principal appoints another person to act as an agent on his or her behalf, thus conferring authority on the agent to perform certain acts or functions on behalf of the principal. Powers of attorney are routinely granted to allow the agent to take care of a variety of transactions for the principal, such as executing a stock power, handling a tax audit, or maintaining a safe-deposit box. A power of attorney is generally terminated when the principal dies or becomes incompetent, but the principal can revoke the power of attorney at any time.
POA and sales deed
Now that we have seen what is Power of Attorney and the legal process behind it. When it comes to buying or selling a property Power of Attorney is not a valid instrument to transfer property titles. However, selling the property through General Power of Attorney had become common practice across Indian cities, owing to the monetary benefits it offered, both the buyer and the seller.
A sale deed must be carried out for transferring property titles, following which the buyer has to pay stamp duty and registration charges. The seller will also have to bear the burden of capital gains tax on the transaction. By transferring property title through a General Power of Attorney, these charges are avoided. “From the sellers’ perspective, a General Power of Attorney makes it possible to carry the transaction even if they do not hold clear property titles. General Power of Attorney, in fact, is their only option. From the buyers’ perspective, they can afford property at much cheaper rates than the market price.
Two types of POA
-
general power of attorney- When a person is authorised with absolute general right or power to act legally with respect to the property or bank accounts or tax payments, or registration work or to file a case against 3rd party etc by another person is termed as a GPA.
-
special power of attorney- An SPA is transfer of special power which is only granted for a specific assignment and once the specific assignment is completed the SPA automatically comes to an end.
A typical example of an SPA is when people rent out their property or when the agent appears for the registration of the principal’s property or when the agent appears in a court or before the Tax authorities on behalf of the Principal etc.
Is property sale through power of attorney legal?
In 2011, the Supreme Court ruled that property sale through power of attorney (PoA) is illegal and only registered sale deeds provide any legal holding to property transactions.
There are two different ways to execute a POA from abroad:
Legalization: For this situation, signatures of the notary or judge before whom the POA is executed are needed to be verified by the appropriately authorized representative of the Indian Embassy/Consulate. As indicated by Section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, notarizing a deed from an approved official of the Indian Consulate/Embassy would be viewed as a legitimate public accountant.
Such a POA is not needed to be stopped at the hour of execution. Be that as it may, it should be stamped within three months from the date of receipt of the POA in India. Stamp obligation would be payable as indicated by Section 2(17) read with Schedule-I of the Indian Stamp Act, 1899, when the Deed is presented for registration in India.
Apostallisation: The Deed of POA executed external India is demonstrated through an apostallisation cycle which is administered by The Hague Convention, 1961. Otherwise called super legalization, an apostille is a certificate which affirms and checks the signature/seal of the individual who authenticated the document. Be that as it may, this Deed, as well, requirements to follow Indian laws, for example, the Indian Registration Act, 1908, and the Power of Attorney Act, 1882. A person likewise needs to pay the stamp obligation on this.