Managing property dealings in India from overseas is a challenging task for NRIs. So in order to manage the situation, NRIs, in the majority of cases, resort to granting a power of attorney. It is a common legal tool that enables control through authorising a trusted person in the NRI’s absence. The article below attempts to elaborate on how an NRI power of attorney to sell property in India is granted and the necessary steps to take so that the proceedings are not fraught with legal complications.
A power of attorney is a legally enforceable document that enables one person (the principal) to grant authority to another person (the agent or attorney-in-fact) to carry out specific functions or make certain decisions as specified in that document. A POA can be very useful for NRIs who would not be able to regularly visit India and would hence require someone to undertake the sale, lease, or even safeguard their property among postponing meetings.
Types of Power of Attorney
Before proceeding, it’s essential to understand the two main types of POA:
- General Power of Attorney (GPA):
Major real estate transactions such as property sales, as well as some matters such as banking and business errands, can be executed by the agent with the overall GPA. The reality, however, about this type is that if the terms are only loosely constructed, they are prone to being misused.
- Special Power of Attorney (SPA):
An SPA is general and broad, which grants an attorney more powers to do unspecified things, such as sell any property the attorney thinks is required. It is more common for property transactions since the level of risk involved is reduced.
How Can NRIs Grant Power of Attorney to Sell Property in India?
Step 1: The power of attorney shouldn’t take the long route; draft the power of attorney document first.
Step one outlines the draughting of the POA document, which is well-tiled, indicating the authority being granted. In this case of selling property, the document must include the following key components:
What property is to be sold with its details like physical address, geographical area, land coverage, and so on.
The authorities that will be conferred on the agent include signing of sales deeds, talking directly to the buyers in case of any negotiations, or representing the NRI in courts of law.
The full name, address, and ID details of both the NRI and the agent. More about David
We further recommend that the draft be done by a legal practitioner who understands the Indian laws on property disposals.
Step 2: Attest the Power of Attorney
The power of attorney has to be draughted and then attested to ensure that it is legally valid. The NRI’s location contributes to the differences in the way the POA is attested.
If Abroad: The document in question can be attested in the Indian embassy or consulate in the country where the NRI lives. This requires an individual to show the POA along with other identity documentation like a passport and proof of address. Some consulates may have extra requirements, so it is advisable to make prior arrangements, like phone calls.
If In India: In case the NRI is presently residing in India, he/she can have the POA signed by a public notary to have it validated. This is a quicker procedure and does not involve any embassies.
Step 3: Forwarding the POA to India
Once the attestation is complete, the NRI is required to deliver the original document to their representative or agent residing in India. It is also essential that such documents are sent through reliable courier services that can provide tracking capabilities.
Step 4: Registering the POA
Indian laws stipulate that a lawyer who is attempting to carry out transactions on behalf of an attorney must register the power of attorney at the sub-registrar’s office in the jurisdiction where the said property is located. The agent, bounty solicitor, or interpreter officer on behalf of the NRI can also perform this task.
The following are the documents that will be required for registration:
- The original POA document.
- The identity and address proof of the agent.
- Relevant details of the property.
- The registration cost was applicable.
Legal Considerations for NRI Power of Attorney to Sell Property in India
Choosing a Reliable Agent
It is important to choose an agent. Therefore, such an agent must be trustworthy, for example, a close relative or an attorney, in order to reduce the chances of abuse.
Clarity in the Document
If the first party signs the POA and there are loose provisions, then the borrower can create problems by way of disputes. Manning the document or the agreement should be precise about the powers with regard to the authority and property included.
Validity Period
Endow a limit to how long the POA will be effective. In the case of the sale of property, goodwill can be limited within the particular time of the sale being made.
Revocation of Power of Attorney
Make sure there is a rescind clause so that when the NRI finishes the sale, he can retract the POA. When an NRI wishes to cancel a POA, it must serve a revoke deed and inform the agent and other relevant parties.
Why is it needed to hand over Power of Attorney?
Ease of Operations: Property sale is a complex process that does not require the NRI to be present in India. The agent may carry out the sale tasks without the need to report to the NRI.
Time-saving: This includes resolving who will represent the owner in the transactions and, if applicable, in any follow-ons with the local authorities and the interested parties.
Cost-effective: This is because it shields them from the financial burden of travel and other challenges that can be faced.
Risks and How to Mitigate Them
However, empowering a person to act on his behalf through granting a POA has some risks:
Misuse of Authority: The agent can go beyond the authority granted to him.
Fraud: There are agents with bad characters who may take advantage of the sale and try to sell the properties for their own benefits.
To manage such risks:
- Restrict the membership of the Board on behalf of which the POA holders act and the affairs over which additional powers are conferred.
- Control the agent on a continuous basis.
- Engage lawyers to prepare and supervise the whole process.
Conclusion
An NRI power of attorney to sell property in India has far-reaching recommendations as far as one’s property and transaction dealings are concerned. A proper execution, notarisation, and inscribing of the POA becomes beneficial to NRIs for protecting their interests irrespective of location. Engaging legal advisors all through the steps is paramount to forestall dangers and also meet the requirements of the Indian rules and regulations.
For NRIs looking at engaging in property transactions in the Indian subcontinent, an efficiently draughted and executed POA can offer practicality, protection, and peace of mind.
FAQs
Is it possible to use a POA to sell property that is owned by more than one person?
Yes, it is possible, but in such cases, all co-owners should agree and execute individual POAs in respect of their shares.
Are there any time limits to the POA?
There are limitations on how long the validity of the POA lasts. It lasts as long as the stated period in the paper or until the principal decides to cancel it.
Is it possible for an NRI to be in possession of a digital or electronic POA?
Despite electronic signatures becoming common in some cases, it is almost always ideal to have a physical POA with the necessary attestation when doing legal business affairs in India.