Is It Legal To Sell Property With A Power Of Attorney?
Legal To Sell Property : The Supreme Court determined in 2011 that the use of a power of attorney (PoA) to sell real estate is unlawful and that only registered sale deeds provide real estate transactions any kind of legal standing.
Real estate has always been one of the primary asset sectors for hiding unexplained funds. Over time, several methods for seeming legal were developed, such as the sale and acquisition of property through the use of power of attorneys (PoA).
In reality, property sales using powers of attorney have been extremely popular over the past several decades in locations like Delhi. Property sales made with the use of a power of attorney typically involve two parties working together to skirt the law.
Beginning in the 1990s in the 1990s, beginning in the 1990s, beginning in the 1990s, beginning in the 1990s, beginning in the 1990s, beginning in the 1990s, beginning in the 1990 So much so that the Supreme Court (SC) was compelled to take cognizance of the situation. In 2011, the SC issued a historic decision outlawing the sale of property through power of attorney.
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Property cannot be sold via a power of attorney: SC
The Supreme Court (SC) concluded that only registered sale documents provide such transactions any legal standing. Although declaring that property transactions made through general powers of attorney (GPA) had no legal legitimacy.
What is a power of attorney, and how does one sell property with one?
The POA is discussed in detail below, along with how and why sales made using this instrument are prohibited.
Legal To Sell Property: Property Power of Attorney (PoA)
The Powers of Attorney Act of 1882 and the Indian Stamp Act of 1899, two statutes of India, both address the idea of POA. According to these regulations. A POA is a document authorising a certain person to act on behalf of the person carrying out the transaction.
In essence, a person grants another person the authority to act as his agent and to carry out particular responsibilities on his behalf.
Non-resident Indians (NRIs) frequently utilise this tool as they might not be able to travel back to their home country at a certain time due to their professional or personal commitments. A POA is useful for very busy people, such as businesspeople and those who are unable to undertake numerous personal and professional obligations, because to the ease it offers.
Types of POA include Special POA and General POA (GPA) (SPA)
A special power of attorney (SPA) is provided in order to complete specialised activities. As opposed to a general power of attorney (GPA). Which provides an agent the authority to carry out normal tasks on behalf of the principal.
“An SPA talks about a specific act that the representative can carry out on behalf of the principle, whereas a GPA talks about wide powers granted to a representative. If you give someone a GPA, they may serve as your agent and manage and resolve issues. Collect rent on your behalf, handle any bank-related tasks, and pay your energy bills.
On the other hand, he continues. If an NRI has to sell a property in India. They would do it through a local agency using an SPA.
Both the GPA and SPA must be registered in order for them to be considered legally binding. Once the task it was designed for is finished, an SPA loses its impact. The executor has the right to revoke a GPA at any point throughout their lifetime. If they pass away, the GPA is no longer recognised legally.
Legal To Sell Property: How did the property sales through GPA occur?
On the transaction, the buyer is required to pay stamp duty and registration fees. whilst the seller is responsible for paying capital gains tax. In addition. Information included in a sale document that has been registered becomes public and may be utilised at any moment to discover benami transactions.
Buyers and sellers frequently agreed on an intricate three-step strategy to carry out the selling transaction with the goal to skirt the law and dodge paying taxes on real estate transactions. To put down the terms of the transaction. A sale agreement (not to be confused with a sale document) was first established.
After then, the seller would draught an irreversible POA, leaving the buyer in control of overseeing the property completely. The third and last stage would be for the seller to leave this property to the buyer through a will.
When the Suraj Lamp & Industries Pvt Limited vs. the State of Haryana case came before the SC in 2009, it was explained that “a hybrid system was evolved, whereby the holder of the flat, on receiving the agreed consideration, would deliver the possession of the flat to the purchaser and execute the following document.” This was done to avoid the time-consuming process of obtaining permissions and to avoid paying a significant portion of the price to the Delhi Development Authority (DDA) as unearned increase.
People who received apartments through lotteries for the DDA’s different housing plans and afterwards sold them to interested parties for extravagant prices found this type of ownership transfer to be increasingly popular.
2013 Delhi High Court ruling on powers of attorney
Many property owners in the national capital region (NCR). Where sales through GPA had become pervasive, were impacted by the Delhi government’s circular. Numerous applications seeking remedy were filed with the Delhi High Court after the notification. According to the HC, the SC judgement made it plain that registration cannot be denied in legitimate instances.
“The SC has not stated that a conveyance cannot ever be registered by using a GPA. The sub-registrar will need to register the transaction as long as it is legitimate, the HC stated. A POA to execute sale agreements can be used for this purpose. “A person may engage into a development agreement with a property developer. For the development of a piece of land or for the construction of flats in a building,” it said.
“In 2019, the Delhi government also extended legal validity to unlicensed projects that had previously been transferred through PoA.”
Legal To Sell Property: Making a power of attorney registration
A PoA must be registered, according to the SC, if it is signed for the sale of real estate. Also keep in mind that a notarized Power of Attorney would be admissible as evidence in court. However, depending on the state in which the document is being created, the regulations may change. For instance, the Gujarat Registration (Amendment) Bill’s clauses mandate the state’s need that notarized power of attorney paperwork be registered.
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