Power of Attorney for Property Transactions in Maharashtra

A power of attorney lets one person act for another. In property matters it is indispensable — for owners living abroad, for family members managing an elderly relative's affairs, for anyone who cannot attend in person on the day a document must be executed. It is also the instrument most often misunderstood, and the misunderstanding is expensive.

General and special

A general power of attorney confers broad authority across a range of matters. A special power of attorney confers authority for a defined purpose — to execute and register one particular sale deed, to appear before one particular authority, to complete one particular transaction.

For property work, a special power is very often the better instrument. It gives the attorney exactly the authority needed and no more. A general power executed casually, in wide terms, in favour of someone the donor later falls out with, is a genuinely dangerous document.

The authority is whatever the document says — and no more

This is the point most often missed. An attorney has the powers conferred by the instrument, construed strictly. Authority to manage property is not authority to sell it. Authority to sell is not authority to gift. Authority to execute a document is not necessarily authority to admit execution before the Sub-Registrar, which is a distinct act.

A power of attorney should therefore enumerate the powers granted. Blanket language — "to do all acts necessary" — is not a substitute for enumeration. It creates uncertainty for the attorney, who may find a Sub-Registrar or a bank unwilling to accept that a particular act falls within it, and risk for the donor, who may find that it does.

A power of attorney does not transfer title

For a period, property in parts of India was effectively traded through a combination of an agreement to sell, a general power of attorney and a Will — the so-called SA/GPA/WILL arrangement — as a way of avoiding stamp duty and registration.

In Suraj Lamp & Industries (P) Ltd v State of Haryana, decided on 11 October 2011 and reported at (2012) 1 SCC 656, the Supreme Court held that such transactions do not convey title. A transfer of immovable property by way of sale can be effected only by a registered deed of conveyance; in the absence of one, no right, title or interest passes. A power of attorney is an instrument of agency, not an instrument of transfer.

The Court left a narrow role for such documents, and that role now carries an important registration condition. Section 53A of the Transfer of Property Act, 1882 protects a transferee in possession under a written contract of transfer. But Section 17(1A) of the Registration Act, 1908, inserted with effect from 24 September 2001, requires that documents containing contracts to transfer immovable property for the purposes of Section 53A must themselves be registered. A contract of that kind executed on or after that date and left unregistered has no effect for Section 53A purposes.

The practical consequence for a buyer is direct: if you are offered property on the basis that the seller holds a general power of attorney from the owner, you are not being offered title. Examine what the power actually authorises, whether it is still subsisting, and what the underlying title chain is.

Registration, attestation and stamping

Whether a power of attorney must be registered, and how it must be authenticated, depends on what it does and what it will be used for. A power conferring authority to present a document for registration is subject to its own requirements under the Registration Act, 1908, and a power relating to the transfer of immovable property is treated differently from a simple authority to collect rent.

Stamp duty on a power of attorney varies materially — by the powers conferred, by whether the power relates to immovable property, by whether it is given for consideration, and by the relationship between the donor and the attorney. There is no single figure, and a general article that quoted one would mislead. The applicable article of the schedule should be identified for the specific instrument.

Executing from outside India

Where the donor is abroad, the power is executed there and then has to be made usable in India. Broadly, that means execution before the appropriate authority in the country of execution — typically an Indian consular officer, or a local notary with authentication under the arrangements applicable to that country — followed by the steps required on receipt in India, which can include stamping within the period allowed after it is first received here.

The requirements differ depending on the country of execution and on what the document is to be used for, and they do change. This is an area where confirming the current requirement before execution saves a document being rejected after it has travelled.

Why powers of attorney get rejected

A power that is legally sound can still fail in practice, usually for one of a small number of reasons. It is worth knowing them before the day of execution, because most are avoidable and none are convenient to discover at the counter:

• The specific act being attempted is not among the powers enumerated — the commonest failure by some distance.
• The instrument is not stamped correctly for what it in fact does, or duty was not paid within the period allowed after a foreign instrument was received in India.
• It was not registered or authenticated in the manner required for the use to which it is being put.
• The donor's identification particulars in the power do not match the identity documents produced.
• The property is described too loosely to establish that it is the property the power relates to.
• The power has expired by its own terms, or the transaction it was given for has changed shape since it was executed.

The recurring theme is specificity. A power drafted for the actual transaction, describing the actual property and enumerating the actual acts, rarely causes difficulty. A generic form downloaded and filled in frequently does.

Revocation

A power of attorney can ordinarily be revoked by the donor. A power coupled with an interest — where the attorney has an interest in the subject matter, not merely authority over it — stands differently and may be irrevocable in accordance with its terms.

Where a power is revoked, the revocation should be documented and brought to the notice of those who may otherwise act on the original. A revocation that nobody knows about offers limited protection against an attorney who continues to hold the instrument.

Our power of attorney service covers general and special powers of attorney for property transactions, including instruments executed abroad by non-resident clients. There is no consultation fee — contact us.