Power of Attorney (PoA) is not an authentic instrument to execute a transfer of property titles. Although, the method of selling and buying a property through General Power of Attorney (GPA) and Special Power of Attorney (SPA) had been widespread all across Indian cities. It is because of the monetary benefits such as selling and buying offered to both the buyer as well as the seller.

Generally, a sale deed has to be executed for transferring of property titles in India, following which the buyer of the property has to pay the standard stamp duty fee as well as the registration charges for the property. Apart from this, the property seller also has to carry on the weight of capital gains tax (CGT) on the said transaction. And by transfer of property title through a GPA, registration, as well as tax charges, are prevented.

Now from the viewpoint of a seller, a GPA makes it plausible to take the transaction forward even if the property seller does not possess clear titles to the property. As a result, a GPA is the mere option available for the seller.

However, from the perspective of a property buyer, a buyer can afford to purchase a property at a much cheaper rate as that of the actual market rate of the property. A buyer can also purchase such a property which he/she would not be able to unless without using this method.

According to the prescribed law, agricultural land cannot be sold for any residential purpose without converting the use of the property. To avoid the same, the majority of the landowners sell their property assets without getting involved in the nitty-gritties of the legal hassle of conversion and therefore, sell their property assets through a General PoA.

Also, there are plenty of other legal limitations that encourage property owners to captivate in the sale of a property via General PoA. Moreover, in most government housing schemes like DDA, etc. where housing units are assigned on a leasehold basis, there is a stipulated development period before which the assignees cannot sell the property to any other person. Such units of property are mostly transferred through a GPA. Earlier, GPA was also regarded as a safe medium to invest one’s accounted wealth in real estate. Also, in most cases, members of a family grant legal rights of a property through a General Power Of Attorney.

Apart from this, in many cases, inexperienced homebuyers fall victim to frauds about buying and selling of properties and also end up investing in properties without understanding the legality involved in the transaction of property.

What would happen if an individual purchased a property through GPA?

An individual who purchases a property through a General Power of Attorney might well have the “possession” of the property. At the same time, due to the absence of a valid registered sale deed, the person would not be treated as the rightful legal owner of the said property and land.

Besides this, due to the absence of valid property title with the name of person, it would become difficult to sell off the property in the future, unless and until the people does it through a General PoA by trying to extend the illegal course of action.

What if an individual is planning to purchase a property through GPA?

In addition to the concerns mentioned above, a potential buyer would also find it extremely hard to get finance from a reputed bank in case he needs finance against the property. It is because, as a standard practice of banks, they do not finance funds towards property transactions that are done via GPA. Therefore, the solely requisite to get finance from a bank while buying a property is for the property title to be entirely clear.

What kind of powers can the Principal permit to his/ her agent/attorney through GPA towards a property? A General Power Of Attorney must not be granted to execute a transfer of titles in a property. Instead, a grant of General PoA to an agent can make the agent responsible for managing and monitoring the estate of the Principal, for managing and monitor the rented properties of the Principal, even pay the exclusive utility bills as well as act as the official representative in home loan-related transactions. The Principal can further empower his/ her attorney, to register his/ her property through a GPA.