Sale of Property through General Power of Attorney (GPA)

The question is whether the sale of an immovable property through GPA is legal in India?

What is GPA:

First, we have to understand what is a General Power of Attorney (GPA).

GPA is a written document signed by a person called Principal in favour of another person called Agent or GPA Holder, nominating, appointing and authorizing him to do various acts mentioned therein, in his name and for and on his behalf.  It is to be noted that GPA shall remain in force till the time the Principal is alive, if it is not revoked by the Principal earlier.

The acts done by the GPA holder are binding on the Principal as if done by the Principal himself.

Stamp Duty and Registration of GPA:

GPA should be prepared on the appropriate value of stamp paper. If the GPA is given without any consideration, then it is a good and valid document if it is prepared on the appropriate value of stamp paper and notarized by a notary public. However, if the GPA is given for consideration, then as per the Indian Registration Act, 1908 it has to be registered in the Sub-Registrar Office by paying applicable stamp duty and registration charges.

Misuse of GPA in property Transactions in India:

Offen, a GPA was/is misused by the buyers and sellers to avoid stamp duty, registration charges, capital gain taxes, etc. by executing an agreement to sell and a registered will along with an unregistered GPA in favour of the buyer by the seller and delivering possession of the property without disclosing the sale consideration. The Hon’ble Supreme Court of India in the matter of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. had held vide its judgment dated October 11, 2011, that the sale transactions through GPA do not convey any title and do not amount to transfer, nor can they be recognized as a valid mode of transfer of immovable property. Consequently, the buyer cannot become the title holder or owner of the property if the property is purchased through GPA and even mutation cannot be done in the name of GPA holder.

After the initial ruling, the Supreme Court issued an order prohibiting local governments from registering properties through GPA. However, Genuine transactions through GPA would not be invalidated.

How, GPA is used in Genuine sale transactions: 

The owner of a property can execute a GPA, in favour of his family member, relative or friend to manage or sell his property, in case he is unable to manage the property or unable to execute the sale deed personally, due to any reason. A person can also enter into a development agreement with a builder for developing the land or constructing apartment by giving a GPA in favour of builder empowering the builder to execute agreements of sale or deed of conveyance in favour of prospective buyers.

Where owner’s title is not clear and also in irregular colonies, the property sale is still prevalent by executing an agreement to sell and a registered will along with a GPA in favour of the buyer due to the reason that sale deed is either not open for registration in such areas or seller is not authorized to sell because owner’s title is not clear in irregular colonies.

Purchasing a property through GPA should be avoided:

I would like to mentioned some reasons here as to why you should avoid buying property through a GPA:

Ownership rights is Limited: You cannot become the legal owner and property cannot be mutated in your name until a sale deed is registered in your favour.

Revocation Risk: The Principal can revoke the GPA anytime, rendering the purchase invalid and even if it is not revoked it will become ineffective on the demise of the Principal.

Dispute potential: Legal disputes with the original owner or agent can arise.

Conclusion:

Even though you paid money for purchasing the property through GPA, you do not legally own the property. You cannot get the property mutated in your favour. You cannot sell the property as owner without the sale deed. Even you cannot avail bank loan on the said property.

Only a conveyance deed or sale deed duly stamped and registered with the Sub-Registrar office is a valid document for transfer of ownership of immovable property. If anyone needs any kind of legal help or advice in this matter, you can contact me at any time. I will definitely help and advise you. My number is 9818865693 and email is adv.jeetkumarsingh@gmail.com