Power of Attorney (POA) Rules for Property Deals

The Tamilnadu Registration Department has revised the rules of using the Power of
Attorney(PoA). These changes are effective from 1st Dec 2012.
The purpose of these changes was to prevent misuse of Power of Attorney. Also, it
aims to plug loopholes in the existing practices.
What is Power of Attorney
A power of attorney (POA) is a legal document giving one person (the agent or
attorney) the power to act for another person (the principal). That means Power of
Attorney authorizes a person to perform transactions on behalf of another.
 
There are different types of POAs that fall broadly under two categories. They are
either a general power of attorney or limited power of attorney.
Situations when Power of Attorney is Useful
Power of Attorney is a useful method in many
property transactions.
For Joint Development of a Property

When the Principal is willing to Develop the

property with the help of a Promoter, the PoA
comes in handy. This is known as Joint
Ventures. In such cases, the Principal cannot
rescind the PoA Deed.
For NRIs

Power of Attorney is very useful for NRIs to buy

or sell properties. When an NRI wants to buy a
property in India through a PoA, he/she need
not give the property details in the PoA. This is
so because the description of the property will
be known only after the property is identified.
Other Situations when PoA is useful

The power of attorney for the land registration

process in India can also be used by an
individual who is bedridden or ill. Also useful for
an aged person with health problems. There
may be other circumstances when an individual
is unavailable to conduct the transactions.
Life Certificate
What does the new Rule say?
POA holder should submit proof to the sub-Registrar that the Principal is alive. For
this, a Registered Medical Practitioner or Gazetted Officer can issue a Life
Certificate. These certificates are valid for 30 days only.
The new rules are applicable to all POAs registered since February 4, 2013. By law,
POA is not valid once the Principal dies. 
 
In Tamil Nadu, POA holders carry out many property transactions on the basis of
POAs. It might be so to avoid payment of stamp duty and registration fees.
 
There are many reports of POA holders selling a property after the death of the
Principal. Buyers get into trouble when Legal Heirs of the property owner claim rights
over it. Such cases end up in protracted legal battles. Some times, the Courts
declare the Sale Deeds as invalid.
Compulsory Registration of Power of Attorney Deed
Registration of PoA Deed is Compulosory if the PoA is granted after 1.12.2012.
Power of Attorney Executed Outside India

It’s clarified by the Registration Department that any Power of Attorney relating to
immovable property executed outside India does not require compulsory registration.
However, attestation by the Consulate Office is required. Consequently further
document presented (based on such unregistered Power of Attorney executed
outside India) can be accepted for registration.
Where to register the PoA?

PoA shall be presented in the SRO in whose

jurisdictional area the property in whole or a
portion of it is situated. Or, it can be registered
in the SRO where the Principal ordinarily lives.
PoA Registered Outside Tamilnadu

POAs registered in other states can also be

used for registering and execution of documents
in Tamilnadu. However, in such cases the
Registrar shall get written confirmation from the
concerned SRO before proceeding with the
registration.
Company/Partnership Firm/LLP

Authorising a person to execute and present a

document on behalf of a Company/Partnership
Firm/LLP by the Partners/Directors cannot be
considered as a Power of Attorney. Since, all
the Partners/Directors of the
Company/Partneršhip Firm/LLP cannot execute
a document, it becomes necessary for them to
identify a suitable person to execute the
document on behalf of Company/Partnership
Firm/LLP through a resolution/ authorisation.
This resolution/authorisation should be enclosed
as part of the document.

A company/partnership firm/LLP can be

appointed as PoA.
Can One Sell His Property WITHOUT Annulling the Sale Agreement?
Yes. Says the Madras High Court. 
Registration of a sale agreement, expressing willingness to sell a property to a
particular person on receiving full payment in future, will not be a bar for the property
owner to go ahead and sell or transfer the property to a third party without getting the
sale agreement annulled through a civil court decree, the Madras High Court has
ruled.
Read The Hindu Full Report
Supreme Court: No Transfer of Title Deed through PoA
By a Judgment in 2011, Supreme Court has made it clear, that  Property sales
through the common practice of general power of attorney will not give ownership
title to the buyer.
Well, these were done to, primarily, to avoid payment of Stamp Duty and registration
fees on the Sale deed, and to avoid payment of capital gains tax. These transactions
have also paved the way for the “safe investment of black money”.
“A POA is not an instrument of transfer in regard to any right, title or interest in an
immovable property,” the bench said, after interpreting various provisions of the law
concerning property sales.
 
However, the bench said the judgment would not affect “genuine transactions”
under the GPA. “For example, a person may give a POA to his spouse, son,
daughter, brother, sister or a relative to manage his affairs or to execute a
deed of conveyance.” The court further said that a person can enter into a
development agreement with a land developer or builder for developing the
land either by forming plots or by constructing apartment buildings. In that
connection, he can execute an agreement of sale and grant a POA that will
allow the developer to further sell the property to prospective purchasers.
Legal Status of Transaction concluded through Power of Attorney

Thus, while POA to avoid payment of Stamp

Duty and parking of black money is
discouraged, genuine transactions /sale made
by the agent will be valid, is binding on the
principal, and will convey a proper title to the
purchaser(s).
Can PoA appoint a Sub-Agent?

Power Agent cannot appoint a sub-agent for

registration of document. Consequently such
documents shall not be accepted for
registration.
Cancellation of Power of Attorney
A Power of Attorney executed can be cancelled. It should be done by registering a
Deed of Cancellation. The Cancellation deed will have to be registered by the same
authority who registered the PoA.
 
Disclaimer:The advice, views and suggestions published in the Website CHENNAIREALTIES.in are
for educational and informational purpose only.
 
Readers are advised to do their own independent enquiries, consult professionals wherever
necessary, for their specific requirements before relying on these information.-Edit
Also, read: The Encumbrance Certificate