What is Power of Attorney, and How Does it Work? 

A Power of Attorney in India is a legal tool used by people to give the rights to someone else to manage tasks on their behalf. It comes in handy for Non-Resident Indians (NRIs) and people living in other cities/ states when property related tasks need to be performed someplace they cannot be physically present at. Contrary to popular belief, a PoA – falling under the Power of Attorney Act 1882 – is a simple and flexible tool that can be effectively used in numerous cases. This guide covers Power of Attorney meaning, when and why you might need it, how it works, and the right way to create as well as revoke it. 

What is Power of Attorney? 

For the starters, PoA full form is Power of Attorney. In the most simple terms, a Power of Attorney is a legal document that designates someone else to make decisions on matters related to property, finances, or medical care of the principal person. While the person giving the authority is called the principal person, the other party who is supposed to act or be present on their behalf is referred to as the agent or attorney-in-fact. 

Such legal documentation often becomes essential when an individual needs someone trustworthy to manage their property or look after a Residential Villa in Lajpat Nagar Delhi on their behalf. This ensures that even in the principal’s absence, their real estate and related decisions remain in reliable hands.

A PoA by no means equals transfer of ownership; it only is a means to delegate property transaction related tasks to someone on your behalf. You can revoke a PoA at any time by following a simple procedure. 

Why is a PoA Needed? 

A Power of Attorney is needed for various purposes at different stages of life, as explained below: 

Managing the property 

This is the most common reason why people get PoAs made. If you own a property but cannot be physically present to handle property related tasks such as sales agreement, property registration, rent collection, maintenance and documentation matters, you can get a PoA executed and authorise a trusted person to manage these tasks on your behalf. 

For NRIs 

People living outside of the country need to depend on someone to keep things in order for them when they cannot come to India for those tasks. Be it signing sale deeds or dealing with land disputes, operating bank accounts or going to government departments for tasks, having someone authorised to take care of these matters through a valid PoA helps. 

Managing construction formalities 

If you run a housing business on a big scale, you must have noticed that n number of signatures are required on possession letters, NOCs, and maintenance agreements for the completion of a housing project. Given your tight schedule, you can get a PoA created and assign a trusted employee or a family member to shoulder this responsibility for you. 

Various Types of PoA 

Various PoA documents are available for different tasks as detailed here: 

General Power of Attorney (GPA) 

Also known as conventional PoA, this document covers basic property related formalities. It is beneficial for people who want someone to manage one or more properties for them. 

Special Power of Attorney (SPA) 

As the name suggests, this document is formalised for one specific task at hand, such as signing one sales deed or attending one registration appointment. Once the special purpose is achieved, the SPA becomes null and void. 

Springing Power of Attorney 

This PoA becomes active only if the event occurs as mentioned in the document. For instance, if the principal goes out of the country, the agent becomes responsible for carrying out the procedure for them in their absence. 

Note: The principal can authorise an agent to execute the property sale on their behalf. However, after the Supreme Court’s 2011 judgment, a PoA cannot be considered a property sale document. Ownership in such cases can be transferred only after the registered sales deed formalities are completed. 

How to Create a Valid PoA 

Drafting a PoA is an easy process that just requires clarity and proper registration. Below are the steps to follow when creating a valid PoA: 

Decide the purpose 

Once you arrive at why you need a PoA, it becomes easy to proceed and choose between the type of PoA needed. For instance, an SPA is needed for the sale of a property without the owner being physically present there. 

Draft the document 

You could use legal help to draft the PoA document. Lawyers can help structure a solid PoA by including details like: 

• Full details of the principal and the agent 

• Clear description of the powers being granted 

• Duration of the authority 

• Limitations if any 

• Right to revoke 

• Signatures and witnesses 

Sign in presence of witnesses 

The principal is required to sign the document in front of two witnesses. While the signatures of the agent are not required by law, some people go ahead and get their signatures for the record. 

Register or notarise 

Whether you need to get the PoA registered or notarised depends on the purpose of the PoA. A PoA must be registered at the Sub-registrar’s office if it deals with sale, possession, or transfer of property. 

Notarisation is enough for PoAs that deal with financial work, legal representation, and personal matters. 

NRI execution 

An NRI can execute the PoA at any of the following: 

• The Indian Embassy or Consulate abroad 

• A local notary public 

Once the document reaches India, it must be stamped with the concerned authorities within the set timeframe for it to hold value. 

PoA Format 

The format of a valid PoA document consists of sections identifying the principal and the agent, specifies the powers/ rights granted, outlines the duration, and consists of signatures of the principal and witnesses. In order for it to hold value, a PoA should be drafted in legal requirement of the jurisdiction where it will be used. 

PoA Stamp Duty 

Whenever a legal document is drafted, stamp duty becomes an integral part of it. Similarly, a PoA becomes valid only after the stamp duty is paid. The charges depend on the agent that you choose. A brief explanation is as follows: 

When the agent is a family member or a close relative, the stamp duty charges are INR 500. 

When the agent in someone other than family or relative, the stamp duty charges depend on consideration value or market value of the property, whichever is higher. 

Considerations while handling a PoA 

You must restrict power as much as possible. Blanket/ extensive power must be given only in extreme cases. Further, adding a start date and an end date helps prevent misuse. The agent should be chosen after careful consideration and should be someone trustworthy and responsible. Don’t forget to revoke the PoA in writing as soon as the said task is completed. 

Revoking a Power of Attorney 

The process of revoking or cancelling a Power of Attorney is fairly simple. In order to do so, one needs to apply the following steps: 

• Draft a revocation deed 

• Get the deed notarised or registered (per the original PoA) 

• Inform the agent (the person in whose name the PoA was made) in writing 

• Notify relevant authorities like the registrar or the bank 

As soon as the PoA is revoked, the agent loses all rights and authority on the said property. 

PoA in Property Deals: Safe or Risky? 

No legal ownership transfer: A PoA only grants agent the permission to act on behalf of the principal. It does not transfer ownership of the property, for which a registered sale deed is required. 

Risk of fraud/ forgery: Many cases have surfaced in the past where forged PoAs have been used to illegally sell a property. 

Revocation issues: The principal can revoke a PoA at any time, without prior intimation. A PoA holder might still use the old document to sell the said property, making the transaction invalid. 

Difficulty availing home loan: Banks do not sanction loans for properties without a clear title or having only PoA document. NBFCs may sanction loans but that comes at a higher premium. 

Problem with property mutation: Municipal authorities do not change ownership in government records based only on the PoA. 

A Power of Attorney is a practical legal tool that makes life easy for people. Whether you are an NRI, or a working professional living away from hometown, or a business owner with branches spread across cities, a PoA keeps the work running even when you cannot be physically present. For further understanding on the implication of a PoA when a property transaction is involved, get in touch with us at Buniyad Realty today! 

Also Read: What Is Stamp Duty in Noida: A Complete Guide