Buying or Selling Property through a General Power of Attorney

A General Power of Attorney (“GPA”) is a document through which one person (“Principal”) appoints another person (“GPA Holder”) to do all acts specified therein, for and on behalf of the Principal. The acts done by the GPA  holder pursuant to the GPA are binding on the Principal as if done by the Principal himself. In India, it is not quite uncommon in the real estate sector to use a GPA for all kinds of property transactions i.e., buying, selling, mortgaging, leasing etc.

How GPA was earlier misused in property transactions in India?

A GPA was often misused by the buyers and sellers to avoid stamp duty, capital gains, taxes, etc. by executing an agreement to sell and a will along with the GPA in favour of the buyer by the seller and delivering possession of the property for an undisclosed sale consideration (“GPA Sales”). However, the Hon’ble Supreme Court in the matter of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. vide its judgment dated October 11, 2011, held that transactions of the nature of GPA Sales do not convey any title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immovable property.

How can GPA be used in genuine property transactions?

The owner of a property may execute a GPA, in favour of a family member, relative or trusted friend to manage or sell his property, in case he is not able to manage the property or execute the sale, personally due to any reason. A person may also enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that regard execute an agreement of sale and grant a power of attorney empowering the developer to execute agreements of sale or conveyances regarding individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty.

Here, the important thing to note is that the GPA should not be considered as a transfer instrument of any title, right or interest in any property.

Executing GPA in India:

If the Principal at the time of executing the GPA resides in any part of India, the GPA has to be executed before and authenticated by the Registrar or Sub-Registrar within whose district or sub-district the Principal resides.

Executing GPA outside India (by an NRI/PIO/OCI):

If the Principal at the time of execution of GPA does not reside in India, the GPA has to be executed before and authenticated by the Indian Consulate / Embassy or Notary Public.

How to Register GPA executed in India?

Registration of GPA in India is done at the offices of the Sub-Registrar. GPA in India has to be prepared on stamp paper of appropriate value. The Principal and the GPA Holder have to visit the sub-registrar office with the GPA for registration. The executed GPA has to be presented to the Sub-registrar along with original documents with copies showing proof of ownership, proof of residence and proof of identity. Two passport size photographs and two witnesses who should also have proper identification are also required for registration of GPA.

How to Register GPA executed outside India?

Registration of GPA executed outside India is also done at the offices of the Sub-Registrar. GPA executed outside India can be prepared on plain paper and executed before and authenticated by the Indian Consulate / Embassy or Notary Public. The GPA is then sent to India to the GPA Holder. The GPA Holder has to visit the sub-registrar office with the GPA for registration. The executed GPA has to be presented to the Sub-registrar along with original documents along with copies showing proof of residence and proof of identity of the GPA Holder. Two passport size photographs and two witnesses who should also have proper identification are also required for registration of GPA.

Cancellation of GPA registered in India:

To cancel a registered GPA a revocation/cancellation deed is executed and registered with the sub-registrar in a manner similar to that of execution and registration of GPA.