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How Much Safe Is It To Buy A Property Through General Power Of Attorney?

Before executing the General Power of Attorney, the executants & claimant has to know all the legalities and their authenticity to what extent this document is valid and cannot be revoked in the courts of law.

A GPA means the power given to any confidant or his acquaintance to carry out specific financial or legal obligations on the owner’s behalf wherein an owner is not present physically for due course obligations. GPA is practiced to a greater extent, especially in the fields of Indian Real Estate. But as per the Supreme Court of India judgment of 2011 transferring property through GPA is deemed to be invalid. This practice of adopting GPA is widely in use, because the buyers feel they can evade the taxes or fees needed to pay to the government and many more other reasons. So before signing the GPA document, one has to know all the pros, cons, and nuances of buying the property and make them safe to not fall prey into legal glitches.

A GPA is a document that is to be registered with the Sub-Registrar office of the concerned jurisdiction and is valid for an indefinite period until a lifetime or until the duration principal owner awards GPA to his confidant. And can be revoked by the principal owner anytime.

A GPA holder has no authority to sell the property on his principal owner’s behalf even if he is registered with the Sub-Registrar office concerned. According to Supreme Court Judgment, a GPA holder cannot execute the Sale Deed because a GPA holder has the only authority to carry out obligations other than selling property.

What does the Supreme Court in its judgment of 2011 say ?

The 2011 judgment order states that the GPA is not an instrument of transfer when it comes to right, title, and interest in an immovable property. The court held that Power of Attorney is only a medium created in favor of the recipient also known as the grantee, on behalf of the grantor. Moreover, even an irrevocable power of Attorney does not have the effect of transferring title to the recipient. Therefore, GPA is not valid for executing the sale/ purchase of a property. Transactions related to an immovable property can only be done by way of stamped and registered conveyance deeds, as applicable under the respective state government Act.

After the judgment, the Apex Court directed the government bodies to not register properties based on the GPA documents. However, genuine transactions done through GPA would remain valid.

As observed by the Supreme Court, GPA enables large-scale evasion of taxes, including income tax, Wealth tax, stamp duty, and registration charges. And a GPA transaction facilitates holding the black money.

If one has bought the property through GPA in the absence of a registered sale deed you will not be considered the legal owner of the property. Without the sale deed, one cannot sell the property. And no financial institutions entertain GPA properties.

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