Power of Attorney

A Power of Attorney (PoA) is a legal document by which the principal appoints another person, the attorney-in-fact or agent, as his legal representative on particular transactions or for general business. In property transactions a PoA enables the attorney to transact on their own behalf concerning the management, purchase, sale, lease or otherwise dealing of the property of the principal. Property affairs in India get cumbersome at times, and it is not always possible for every person to deal with their property affairs on their own because, maybe they are living far-off, they are sick, or they have other liabilities. In such situations, use of a Power of Attorney helps in managing and transferring property allotment.

This particular guide will describe what power of attorney for property is, why it is essential, the classification of PoA, legal procedures in getting and cancelling it, and the legal obligations and consequences for the principal and the attorney. 

What is power of attorney for property?

A Power of Attorney for property is a legal instrument where the principal gives the attorney the powers to act for him/her on issues to do with property. Such issues may encompass acquisition or disposal of property, management of property, use or even alienation of property ownership rights. This delegation of power assumes that at some point, the principal cannot perform property-related tasks, and it’s important that these tasks be done by someone trustworthy and with legal authority to do so.

Once need should be taken while such transactions that one should seek help of a legal professional to go through all legal procedures.

Is a Power of Attorney Relevant in Property Transactions?

Real estate transactions in India consume much time and energy, and most owners may not be in a position to manage their own affairs. As the result of physical separation, medical conditions, or business engagements, they offer the documentary Power of Attorney arrangement. It enables a particular attorney to take charge of the property to prevent many problems in certain property issues.

Some of the key reasons why a PoA is critical for property transactions include:

• Convenience: The principal may be out of the country or may also not be able to do face to face business. A PoA enables another person to transact on one’s behalf.
• Legal authorization: It offers the attorney the legal mandate to conduct property matters for the principal and any decision they make is lawful.
• Prevention of disputes: Hence clear documentation of powers reduce likelihood of confusion or disputes in property related issues.

Types of Power of Attorney for Property

When it comes to property there are many types of Power of Attorney. However, they are all used for different things. The extent to which the attorney can exercise his or her functions may depend on the type of the PoA that has been executed. Knowledge about these types is important in order that the proper document is chosen to meet the need.

General Power of Attorney (GPA)

By definition, a General Power of Attorney empowers the attorney to transact on the principal’s behalf in many different property related issues. This may involve purchasing, selling, renting out property, providing a property on mortgage and managing the property.

It is appropriate where the principal requires constant help with their property and would like the attorney to sign them powers of attorney for property management. The attorney can do almost anything, hence the need for a principal to choose an attorney he or she has complete confidence in. Special precaution or care should be taken when spelling out the proffered powers in the PoA so that they cannot be misshapen or abused.

SPA or Special Power of Attorney

A Special Power of Attorney is less broad in comparison to the General Power of Attorney. It makes the attorney act in certain regards for instance to sell a certain property or sign certain documents concerning a certain transaction.

This type of PoA is usually for a single payment or to formally allow one to do something for the principal. Therefore, the specific task and time frame for the use of the SPA must be clearly defined so that it would not be used in ways not intended.

Limited Power of Attorney

The Limited Power of Attorney is actually less broad than the SPA. It gives power to the attorney to do something in regard to a certain event, often limited to a certain period of time. For example, power may be given to the attorney to take charge of property while the principal is out of town or to sign a paper for them.

Such mode of PoA is more appropriate where the principal desires to decentralise the authority for a specific activity for a given period. The powers should be defined by time and scope in which such powers will be used to minimise the chances of contractual ambiguity.

Durable Power of Attorney

A Durable Power of Attorney does not end as soon as the principal is no longer competent to manage his or her affairs. This is especially so when a principal has an illness, an accident or any condition that would render him or her unable to decide on matters to do with the property.

Such PoA is typical for the case when property and financial affairs required to be managed without interruption even if the principal was incapable of handling them. It means that a typical durable PoA must include a clause that the document is still lawful even when the principal is not capable of managing their affairs.

How Power of Attorney be granted?

For the creation of the Power of Attorney for property, both the principal and attorney have the following requirements to meet. 

Eligibility of the Principal

• Age: The principal must be at least 18 years old.
• Mental Competence: The principal must be of sound mind this is because one is able to understand the implication of delegating power to another person.

Eligibility of the Attorney

• Age: The attorney must also be an adult, which means the candidate must be at least 18 years old.
• Mental Competence: The attorney owes the principal the responsibility of performing the tasks required by the PoA and for this, the attorney must be of sound mind.
• Trustworthiness: Due to this, the attorney will have a good deal of control over the principal’s property, and thus, must be reliable.

What is the process of getting a Power of Attorney for Property?

Apply for Power of Attorney for property in several procedures to consider its legal effect and enforceability.

Step 1: Preparing the Power of Attorney Document

• The initial legal procedure that one has to follow before he/she can obtain a PoA involves the preparation of the PoA document. It should clearly specify the following:
• The corporate name and street address of each of the principals and their attorneys.
• The nature of general powers being granted to the attorney, the specific powers being granted to the attorney.
• All the restrictions and reservations to the powers.
• If the PoA is appropriate, it should indicate the period of the PoA with reference to the undertaking of any activity.
• The signature of the principal as a sign of approval.

Although it is not essential to consult a lawyer in drafting the PoA it is recommended that the person doing so should consult a lawyer so that the document is aligned with the laws in India and the interest of the principal.

Step 2: Notarization of Power of Attorney

Although it is not mandatory legalisation is advisable to ensure added credibility of the affidavit. A notarized PoA also assists in creating the legal credibility of the given document to avoid controversy in future.

Step 3: Power of Attorney registration

In some of the property deals like sale, conveyance of immovable property etc., the Power of Attorney needs to be registered under the Indian Registration Act, 1908. For registering the PoA, the principal along with the executed PoA needs to visit the local sub-registrar along with other identity proofs that includes Aadhar card or Pan card.

Which Rights and Responsibilities apply to the Attorney?

However, on appointment as the attorney, the holder of the Power of Attorney possesses some rights and duties as regards the management of the principal’s property.

Rights of the Attorney

A power of attorney allows the attorney to undertake some assignment like purchase, selling, leasing, or even managing of property in accordance with the PoA. The attorney can also make and sign documents on the management of the property.

Duties of the Lawyer

From the following principles of the law of agency it is apparent that the attorney has a legal responsibility towards the principal to perform the duties in the best interest of the principal. They are required to adhere to the directives provided under PoA and are required to act with utmost levels of accountability, especially on the aspects of property dealings. 

This includes:

• Inaccurate records of transactions are not kept.
• As possible, informing the principal regularly about being accountable to top management can be useful.
• Neither shall engage in any transactions necessary to sell or purchase any kind of property where one will have interest arising therefrom or gains to be derived therefrom.

How Can a Power of Attorney Be Revoked?

A power of attorney can be cancelled or recalled by the principal any time that he desires. In the case where the principal no longer wants the attorney to manage their property, the principal will write a revocation letter.

Revocation by the Principal

To revoke a PoA, the principal must give the attorney a written communication, which indicates that the power is being withdrawn. In case the Registration is done the principal is supposed to write to the Sub-Registrar requesting for the cancellation of the Registration.

Revocation Due to Incapacity

Thus, if the principal undergoes an illness that makes him/her incompetent to manage his/her business, such a PoA may remain effective as long as the principal wants it that way upon regaining consciousness.

Some cases may occur in the course of handling the clients cases where the attorney may be fired for misconduct.

If the attorney abuses the powers given, the principal is allowed to cancel that PoA at any time.

Legal Consequences of Power of Attorney in India

A Power of Attorney entails a lot of legal repercussions for the principal and the attorney. Once an attorney exercises his/her powers within the conferred Powers of Attorney it becomes legally enforceable. However, in the event that an attorney goes out of bounds or participates in fraud related activities, then he or she is in violation of the law.

But then, the PoA can be challenged in court especially when the property in dispute is at issue. Other legal restraints to execution of powers of attorney include that it can be revoked by the principal anytime and family members or heirs of the principal may challenge the document if they think that the document was signed under force or fraud.

Conclusion

A Power of Attorney for property is an important legal instrument used to deal with or transfer the property in situations the principal cannot do it on his/her own. , it is quite necessary to understand what categories of PoA exist, their legal status, and how one should obtain the document or refuse its issuance. In this way, you can guarantee safe conducting of property transactions and protect your legal rights and interests.

For these reasons, consultation with a legal advisor when preparing and signing a PoA is advisable and stands as the best advice when preparing this document to meet any legal requirement in India and more to the point protect your own interests.

FAQs

Is Power of Attorney required for property transactions?

Yes, Power of Attorney sometimes is required in this case if the principal cannot be present or sign documents physically.

Can a Power of Attorney be cancelled at any one time? 

Yes, the principal is empowered to cancel it at any particular time depending on whether he or she is of sound mind or not.

What are the implications if the attorney abuses or commits misuse of the Power of Attorney? 

If the attorney abuses the powers bestowed by the PoA, then they can be legally dealt with, charged with fraud or even breach of trust.

Is it necessary to register a Power of Attorney for property? 

A PoA used in the sale or transfer of immovable property must be registered. Nonetheless, other kinds of PoA, as mentioned earlier, may not necessarily need registration.

Can I make Power of Attorney for one purpose only? 

Yes, a Special Power of Attorney empowers the attorney to undertake specific actions for instance selling a given property.