GPA For Property: A Complete Guide & GPA For Indian Property Rules
What exactly is a Power of Attorney?
A power of attorney (POA), a crucial legal instrument, enables a person to choose another person or entity to handle their finances, health care decisions, & property (Power of attorney for the property) while they are away. The principal donor or grantor in this arrangement is the individual who gives the other person the authority to act on their behalf. In essence, someone gives permission to another person to act as his agent & complete specific activities on his behalf.
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NRIs (non-resident Indians) usually make use of this feature because they might be unable to return to their native country at a specific time owing to work or personal commitments. Due to its convenience, a POA is ideal for persons who are busy, such as businessmen & those who are unable to fulfil several personal and professional duties. Special and general powers of attorney sometimes referred to as GPAs for property sales, are the two main types of powers of attorney for property.
Explained: General Power of Attorney (GPA) for Property
A general power of attorney (GPA) enables an agent to handle routine duties on the principal’s behalf.
A representative may be given a variety of powers under GPA. Consider giving someone a GPA for a piece of property. In that situation, they can act as your agent and handle all of your banking needs, including paying your bills, collecting rent for you, handling conflicts, and handling all of your financial transactions. This persists for a predetermined time. The PoA agent is equipped with this facility to make both personal & professional judgments. Residents in Delhi can also choose house loans for GPA real estate.
This only relates to a specific duty and is valid for a specific amount of time. The PoA agent is equipped with this facility to make both personal & professional judgments.
What exactly is a Power of Attorney?
When someone grants a lawyer specific authorization to act on their behalf, this is known as a special power of attorney. Special powers of attorney provide restrictions on the range of decisions. That may be made or the decisions that may be made. For instance, a special power of attorney could be given just for making medical decisions or selling a certain house. To be effective, a specific power of attorney must be signed. This document will define the precise rights granted to the attorney and include information from both parties, including the attorney’s certification.
Power of attorney and real estate
The aforementioned demonstrates that a POA is a useless document for transferring ownership of property. However, India had adopted the practice of issuing a GPA for the sale of the property due to the financial benefits it offered.
The execution of a sale deed, followed by the payment of registration fees & stamp duty by the buyer, is frequently used to transfer property titles. The capital gains tax that was levied on the transaction must be paid by the seller.
A conversion must be performed before agricultural land can be sold for residential use, according to the law. Instead of going through the conversion procedures, the majority of landowners sell their property through the GPA for Property. The owner may be forced to select GPA for the sale of a property in India due to additional legal limitations.
The majority of government housing initiatives are backed by a gestation period. Which for a set amount of time precludes buyers from reselling the home to a third party. The GPA was viewed as a mechanism for real estate investment using the accounted fund. Occasionally, family members appoint broad powers of attorney to provide property rights. A juvenile individual will frequently make real estate investments without thinking about the possibility that they are breaking the law.
How was the GPA for Selling Real Estate in India Misused?
Buyers and sellers frequently take use of GPAs to avoid paying stamp duty, capital gains taxes, as well as other expenses by signing an agreement to sell and a will in the buyer’s favour with the GPA and giving over control of the property for an undisclosed sale amount.
What the Supreme Court Said: Important Points
- Municipal bodies were explicitly advised against using GPA as the primary document for property registration. According to the court’s order, a power of attorney is void if it is used to transfer real estate. According to the court’s ruling, this is not the case for actual transactions.
- Obtaining registered deeds to complete the title was not prohibited for the parties. According to Section 53A of the Transfer of Property Act, the aforementioned transaction may be used as evidence of possession.
- The ruling prohibited states from registering property using GPA. The court’s decision will stop the flow of illegal money into the dubious real estate market, where forged titles are common. A number of real estate transactions with fixed pricing would also be affected.
- After enforcing a sweeping ban in 2012, the Delhi government now authorizes registration in favour of family members and all other relatives of the trust by registered owners.
Registration of Powers of Attorney
If a PoA is signed for the sale of real estate, the SC mandates that it be registered. Also keep in mind that a Power of Attorney that has been notarized can be used as evidence in court.
Why Is the GPA Format Not Appropriate for the Sale of Property?
According to the Supreme Court, it is feasible to systematically avoid paying income, wealth, stamp, and registration taxes thanks to the GPA procedure. It also questions the benefits of such revenue for the general public and the government.
Second, it’s simpler for persons with hidden income to invest their money and grow their wealth when selling property through GPA transactions. Thirdly, sales made through GPA contribute to the expansion of the real estate mafia & illegal business practises.
It is therefore clear that a deed of conveyance is a necessity when transferring property through a sale. Only if you are able to legally own the property and register it in your name will buying it benefit you as the buyer. It is also advantageous to take into account other aspects outside just the item’s price.
What if you purchased a property using your GPA?
If there is no registered sale document, even though you are in “possession” of the property, you are not its legal owner. Without selling the property through GPA and extending the illegal line of conduct in the absence of distinct property tiles. It would be nearly hard to complete the transfer.
The representative is immediately in charge of managing the owner’s estate and attending to basic duties. Such paying loans and utility bills, after obtaining GPA for the property. An attorney may be given the authority to modify the property under a broad power of attorney. Only a property with a registered sale deed would be regarded as being legitimate legally. The GPA for property in this case is rather restrictive because it won’t give such a transaction any legal effect. The court’s directive to property owners to forgo GPA for property transactions in India is undoubtedly a beneficial development. It will help to stop unethical business activities in real estate deals.
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