Is It Safe General Power Of Attorney To Purchase Property?
Power Of Attorney To Purchase Property : Using a General Power of Attorney (GPA), one person can manage another person’s property and make financial and legal decisions on their behalf. But is it risk-free to purchase the home with a GPA? When necessary, may the document be cancelled in court? Before purchasing a GPA property, purchasers must take into account all of the intricacies, thus navimumbahouses assesses the many parts of the transaction based on the agreement.
In Indian real estate, the General Power of Attorney (GPA) method of transaction is frequently used. However, transferring property through GPA is illegal, according to a 2011 Supreme Court of India ruling. Despite this, the attractive offer that comes with this method of buying a home draws purchasers since, in most situations, sellers are in desperate need of selling their possessions. Homebuyers must thus thoroughly investigate the security of such transactions before signing on the dotted line and be aware of all the subtleties of purchasing a house through the GPA.
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Power Of Attorney To Purchase Property : A general power of attorney is what?
General Power of Attorney is its full name. It is the authority granted by a person to a friend to do particular financial or legal activities on his or her behalf. In situations when the original owner cannot physically be present, such as in the case of non-resident Indians (NRIs) or incapacitated owners, it is a regular practise. In this instance, they provide the GPA to a reliable individual who is authorised to transact business on their behalf.
A general power of attorney’s uses
- Taking care of matters relating to the property on the owner’s behalf
- For handling money on behalf of the principle (the one who issues the GPA)
- For taking care of the principal’s medical needs
- In order to fulfil the “as and what” stated in the GPA deed
In contrast to a Special Power of Attorney, a GPA is distinct.
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What is a Special Power of Attorney (SPA)?
A Special Power of Attorney (SPA) is used when you want to explicitly authorise someone to carry out a certain duty. For instance, the person you appoint to serve as your legal representative in a certain matter will only be competent to represent you in that particular case.
A special power of attorney limits the options available to the agent whereas a general power of attorney grants the agent extensive authority.
Is a GPA required to get registered?
For a GPA to be legally legitimate, it must be registered with the Sub-Registrar Office (SRO). Additionally, the GPA is not valid indefinitely. It is enforceable for the principal’s whole lifetime and is also revocable throughout the owner’s lifetime. On the other hand, the Special Power of Attorney (SPA) is removed after the particular duty that it was given authority to do is finished.
How is a general power of attorney (GPA) registered?
A General Power of Attorney (GPA) for a property can be registered using a straightforward method. If you want to register a GPA for a property, follow these instructions:
- Create the GPA on a piece of stamp paper.
- Visit the SRO, the Sub-Registrar’s Office.
- For the appointment at the SRO, both the GPA holder and the principle owner must be present.
- Submit the required documentation, such as the title paperwork for the property and both parties’ evidence of identification and residency.
- The parties should be accompanied by two witnesses and their identity documents.
- Each participant at the SRO is required to bring two passport-sized photos.
Power Of Attorney To Purchase Property : Real estate sector GPA
Going through the GPA method for a land acquisition is often not advised given the legal complexities involved. However, it was common in India since it gave both the buyer and the seller financial advantages.
The buyer is required by law to pay stamp duty and registration fees to the government if the title to a property parcel is transferred. The transaction’s capital gains tax will also fall on the seller. These fees are avoided when property is transferred through a GPA, which results in a significant loss to the government coffers.
Can a GPA registered holder sell real estate?
A GPA holder is not permitted to sell the property on behalf of the owner, despite having registered a GPA with the SRO. The Supreme Court of India emphatically addressed this in its 2011 decision, which absolutely rejected the sale of a property through GPA. A GPA holder is only permitted to complete the tasks that the owner assigns them, with the exception of selling real estate.
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What draws individuals to GPA transactions?
From the standpoint of a seller, the GPA method enables them to sell a property even if they do not possess clear titles to it. A buyer, on the other hand, is seduced by profitable real estate bargains.
There are further legal laws that support GPA transactions. There is sometimes a lengthy gestation period before a property may be sold lawfully under urban development agencies’ programmes when leasehold assets are allocated. The GPA approach is routinely used to avoid such requirements. GPA is another shady approach to invest unreported funds in the real estate market.
Verdict of the Supreme Court (SC) on the transfer of property via GPA
The Supreme Court’s (SC) 2011 judgement made it very clear that when it comes to right, title, and interest in real property, the GPA is not a transferable instrument. The Court also ruled that a power of attorney is merely a legal arrangement made in favour of the grantee (also known as the person to whom it is granted) by the grantor. Even an irreversible power of attorney does not transfer ownership to the receiver, though. GPA is therefore invalid for the sale of real estate. According to the appropriate State government Act, only stamped and registered conveyance documents may be used for transactions involving immovable property.
Following the aforementioned ruling, the Apex Court instructed the municipal agencies to stop registering properties using the GPA papers. Genuine GPA transactions, however, would continue to be legitimate. According to the SC, GPA facilitates widespread tax evasion, including of income tax, wealth tax, stamp duty, and registration fees. Additionally, GPA transactions make it easier to keep black money and make unlawful gains.
Power Of Attorney To Purchase Property : Delhi High Court decision about GPA
The Delhi High Court declared that property registration through GPA will not be prohibited in real circumstances, as noted in the Supreme Court’s ruling that GPA could not be used as an instrument of transfer of immovable property. The Delhi High Court further cited the Supreme Court’s ruling and said that as long as the transaction is valid, the sub-registrar will record the transfer. In order to develop a plot of land for the purpose of erecting a residential structure. It was also stated that GPA might be used to execute sale agreements or development agreements where a developer and a plot owner are engaged.
The Delhi government legalised GPA property transfers for those unlawful structures without sale documents in light of the Delhi High Court’s ruling on GPA.
What should you do if you purchased a property through the GPA?
Due to the lack of a recorded sale transaction. If you purchased a property through a GPA, you will not be regarded as the property’s legal owner. You won’t be able to sell the property without the sale deed. Additionally, banks have a policy of refusing to fund projects with a GPA.
Why should you stay away from using GPA to buy a property?
The following factors make using the GPA method to acquire real estate undesirable:
- Property changes may be complicated by the local municipal and revenue authorities since the property title can be absent.
- Despite possession and transaction documents. There may be a problem with legal ownership of the property if there is no sale deed. Additionally, the seller could overcharge for the execution of the sale document and registration of the property.
- Financial organisations like banks could refrain from lending to first-time homeowners.
- Buying a home on that premise GPA without later registration might result in seller fraud.
While buying a home through a GPA may appear like a good deal. There might be hidden issues that the buyer is unaware of. Therefore, before signing any property documents. It is essential to carefully examine the small print of a GPA with the assistance of a legal professional.
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