Power of Attorney | Risks and concerns for NRIs | FAQs

Power of Attorney Risks and concerns for NRIs FAQs

 In today’s world, signing an agreement and entering into a contract is of utmost importance. Therefore, POA is an essential element in every estate plan. Granting a Power of Attorney for delegating all decisions to another one by sharing decision-making power is an easy and legal way. Therefore, to some solve legal issues, POA is a better choice. However, unawareness of POA creates trouble for both parties. Whether it is the owner or donor, the rights of both parties have equal importance. So, it is crucial to have some in-depth knowledge on PoA, its advantages, disadvantages, risks associated with it, facts etc.

In 1882, the “Power of Attorney Act 1882, passed in India and came into force on May 1, 1882. Indian Evidence Act 1872, Section 85, presumed that every document associated with it must be authenticated and executed before the notary or magistrate. The exact aim of passing this Act is to make it accessible for financial transactions and effectively take care of the property. A PoA gives an authority by an instrument provided by a person called a donor to another person named as an agent to act on his behalf. Here we will explain aspects associated with it in a detailed manner.


  • Power of attorney is a legal document that gives Power or the ability to act on behalf of another person to fulfil the need of that particular person.
  • It is a universally accepted fact that all documents relating to a POA must be thoroughly examined with legal assistance-It is assumed that the POA grants only those rights as are specified in the document.
  • Detailed and legal advice is always required for entering into such agreements and is vital to protect one’s rights.

What exactly is a Power of Attorney?

PoA is a legal instrument that allows another person to make decisions and choose on behalf of another person. A term called a general power of attorney provides broad powers to a person or an organization. Legally, it means a legal power that includes managing financial transactions and business transactions. Not only that, but it also includes buying life insurance, setting out of claims, operating business interests, employing professionals, etc. This document is beneficial for NRIs. A PoA will help owners physically and mentally in managing the entire affairs related to the matters.

Recommended reading: Transfer Deed and its relevancy for NRI

Types of Power of Attorney

According to the situation, PoA comes into play. When we choose Power of attorney, we should choose the right kind to meet the needs. We will discuss in detail the types of Power of Attorney.

  • General Power of Attorney; As its name indicates, this grants Power to one person to act on behalf of another person. The GPA holder can work on financial, real estate, legal decisions, etc., matters on behalf of the donor. Managing banking transactions, entering into various contracts, bill payments, selling and buying properties are examples.
  • Limited (Special) Power of Attorney: As its name indicates, it is a special power of attorney only for some special purpose. Here, the PoA will get expired once the special task has been performed.

Important Clauses to be Present in Power of Attorney.

Some essential clauses should be present in the PoA. It includes

  1. Real estate and property matters
  2. Selling and buying investments.
  3. Operation of bank accounts.
  4. Power to enter registrations and agreements.
  5. Other essential clauses.

Recommended reading: Rights of legal heirs

Registration of Power of Attorney.

The registration of PoA was an optional case in India when the Registration Act, 1908 was in force. According to the Registration Act, 1908, PoA should also be validated by a sub-registrar only; otherwise, it must be properly notarized by a notary, especially wherein the authority to sell land is granted to the agent. Registration for general PoA is not at all mandatory. But it is highly recommended. If the purpose of creating PoA includes immovable property, it is very much essential. The registration process includes,

  • Drafting of PoA, whether general or special, by conducting documentation lawyer itself.
  • Submitting the PoA with the sub-registrar
  • Attaching all the essential documents with PoA.
  • Attesting the PoA before the registrar.
  • Attesting of PoA by any of two witnesses.

There are some documents required which are important. They are

  • Identification proof.
  • Address proof
  • Passport size photo.
  • Electricity bill or tax receipt of the particular property.

Recommended reading: Title Search of Property in India

Role of Power of Attorney

It is a legal document that gives Power or the ability to act on behalf of another person to fulfil the need of that particular person. The role of the PoA includes several factors. First, it gives the power to make an important decision. The nature of the decision depends on the type of Power of attorney given to that particular agent. It may include the Power of purchase or sale of a property, handling a bank account or handling financial transactions, etc.

The duties of an agent who gets PoA include managing numerous tasks, entering into a contract, dealing with real estate handling, and also includes handling financial and tax affairs. Therefore, the agent should always avoid conflicts and also keep details of all transactions made.

Advantages involved in executing a Power of Attorney.

Now, let’s explain the advantages.

  • It gives an ability of Power to choose while making decisions
  • Avoids the necessity of any guardianship
  • Allows family members to make a decision.
  • It avoids complications on Power.
  • It prevents delays in planning.
  • Provides a peaceful mind for those who are involved in the decision process.
  • It helps to avoid property disputes.

Disadvantages involved in executing a power of attorney.

  • A PoA holder may put in trouble with the principal sometimes.
  • It will not address what happens to assets after the death of the owner.
  • It will be trouble for the owner when his agent is not trustworthy.

Recommended reading: Adverse possession and Its Legal requirements to claim property in India

Legal Powers, which can be granted to the attorney.

It is estimated that the attorney or agent has to manage the Principal’s powers and affairs and can make decisions on their behalf. In brief, it can be concluded that;

  • To execute all the contracts, deeds, mortgages, notes, etc
  • To manage well and settle down all the matter.
  • To collect all the rents, grants, etc.
  • To sign all the contracts and shares of stocks and bonds
  • To sue on behalf of the Principal.

Qualification of an Attorney

The duty of the Principal is to primarily appoint a responsible person. The attorney should be accountable and should act with utmost care and faith. Loyalty towards the Principal is another critical thing. He should be loyal towards the donor and should not disclose any confidential matters without the donor’s permission.

Revoking a Power of Attorney

The PoA document can be revoked at any time by the donor. Revocation is done by giving written notice to the agent. In typical cases, revocation is possible when the donor dies or any bankruptcy happens. Another situation is when the donor has given PoA to his spouse, legal separation or divorce becomes the reason for the revocation. Revocation of PoA depends on the clauses of the deed executed. In general, for the revocation of Power of attorney, there are certain conditions. Some of the requirements are;

  • If the Principal revokes the PoA granted to the agent.
  • If either the Principal or the PoA holder or both become unsound
  • If the business for PoA has been completed.

Recommended reading: Model Tenancy Act For NRIs

Risks and concerns

As its name indicates, an agent gets the Power to make decisions. Giving Power to PoA is not a simple thing because the Principal or the donor will be responsible for anything done by the agent. A PoA is a process of sharing decisions with another person. The fraud committed by the agent will be equivalent to the fraud committed by the donor. So, choosing the agent is very crucial.

To safeguard the donor, one should limit the scope of Power.


While transferring the PoA a lot of facts are considered. Misuse of Power is common everywhere. Therefore, it is clear that Power of attorney depends on several factors, and each Power of attorney differs from the other. So legal advice is the most important, and it can smoothen out all the problems. There are several law firms and real estate lawyers who provide legal support and help the donors.


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 Yes, it is possible to give Power of attorney to two or more at the same time. It is also possible to name a second agent to take over in certain circumstances.

 It is not a legal requirement. But it is always good to get legal advice to avoid confusion and errors.

 Yeah. It is possible. The agent can deposit funds, acquire a retirement plan, etc.

 Yes. The agent can manage and procure the insurance and other related things.

 No. It is not. The agent will be liable only if a contract has specified so.


For a properly partitioned property, a copy of all documents related to ownership should be provided, such as deeds, Wills, and other agreements. Also, a property partition lawyer would ask to provide a copy of all expenses and income associated with the property.

 Property management takes responsibility for day-to-day activities, maintenance, maintaining of properties, security, etc. Property managers work for the property owner. They preserve the value of the property by generating income. The need for a property manager arises when the owner cannot manage all his rental property efficiently. It is in this situation; the role of property managers appears.

 Yes, certain powers cannot be transferred through PoA. It includes Voting, bankruptcy, etc.

 It comes into effect immediately after the signing of it by the donor itself. It can also take into effect in future times. The period for a power of attorney will depend on the donor. It can be written to last either for a limited period or indefinite.

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