If nothing else, the Modi wave of demonetization and benami property has made people sit up and wake up to the necessity of having all property documents, transactions and cash flows in order! One of the prime ways that NRIs get hassled and harassed over property matters is the Power of Attorney.
Why do we need a POA?
Commercial complexities in the world today often demand multi-tasking from an individual. In this scenario, if the individual has someone who can act on his/her behalf on certain issues, it becomes easy for them to tackle their business.
What is the Concept of POA?
- The concept of – Power of Attorney – (POA) has gained importance due to the need of being – present – for business purpose or otherwise, without being physically there.
- It is legally is defined as the – authority whereby one is set in place of another to act for him.
- The person granting the document is referred to as the principal individual and the person attaining it is called the ‘agent.’
- We need to know three things regarding this formality – the purpose of creating the document, the powers that the agent holds and the method in which the document would finally be brought to its logical conclusion. In India, excluding Jammu & Kashmir, issues related to the Power Of Attorney are governed by ‘The Powers Of Attorney Act, 1882.’
What are the two types?
Papers formulated on these lines could be of two types – General and Special.
- The ‘General’ authorizes the agent to act on behalf of the particular person in all matters, or in all matters of a particular nature or generally in respect of general business.
- This kind of POA is known as General Power of Attorney. Whatever the person can do himself, he is authorizing another person to do on his behalf.
- A ‘Special’ format, on the other hand, authorizes the agent to represent the principal party only in the context of some particular specified activity and no sale, exchange, gift or mortgage of a property is to be carried out. This is a restrictive POA and titled as ‘Special Power of Attorney.’
What do NRIs need to know?
NRIs often feel the need of giving a power of attorney because it is tough for them to be physically present always to sort out their matters.
- For NRIs, for any POA to be sanctified, the document must be notarized and signed by the Indian High Commission and other such authorities.
- It’s then sent to India for ratification, and within three months of being issued, the endorsement process in India has to be completed.
What are the formalities related to this?
With determination to discourage the issuance of POAs and to curb down the fraudulent cases, the Government has started scrutinizing the course of action.
- If General Power of Attorney is granted to anybody who’s not a blood relative, a surcharge of 2% will need to be paid.
- If a POA is issued for purposes of sale of property, a form needs to be filled wherein it is mandatory to state whether the sale proceeds would be deposited in the account of the owner or the POA holder’s account.
- The validity of a POA needs special mention.
- It’s vital that people understand that the revocation of a POA can happen only if one of the two holders dies or through some other legal methodology.
What is the validity of the POA?
The validity of the document needs special mention.
- It is imperative that people understand that the termination or revocation of a POA can happen only if one of the two holders dies or it can happen through some other legal methodology.
- A specific Revocation deed is required to be undertaken for this process to be completed.
- All such procedures that are carried out are done so under the ambit of the Power Of Attorney Act, 1882.
The issuing and implementing are both sensitive issues which need to be addressed carefully by all NRIs so that they do not have to undergo any harassment or ambiguity later on.
In a changed, more vigilant India, it pays to be more careful about how you choose to purchase property and how careful you are of the formalities involved.