The NRI buyers have to face various legal issues while finalizing a property purchase in India and PoA i.e. the Power of Attorney, helps them in completing the transaction in a hassle-free manner. But, having this document is not sufficient as the NRIs i.e. the non-resident Indians, must know the basics about holding a Power of Attorney. So, scroll down the blog post and learn more.
1. What is PoA?
Commonly known as a power of attorney, this is a legal document that authorizes a person to perform duties of a property owner known as the principal. The PoA lets a person take important decisions in the absence of the owner. In case of the NRIs, he/she can transfer PoA to any close relative, friend, property solicitor, to a property manager. The Power of Attorney is best suitable for the non-resident Indians (NRIs) as traveling frequently to back home is not possible.
2.Types of Power of Attorney
There are three types of PoAs and all of them are described below:
Special Power of Attorney – As the name suggests, this PoA is useable for certain transactions only. The special Power of Attorney is based on task and its legality end with the completion of purpose. For example, a person holding the special PoA for renting a property can only hire a tenant for the said immovable asset. He/She cannot perform any other task by holding this Power of Attorney.
General Power of Attorney – This type of PoA empowers the person with more rights. A person holding General Power of Attorney can make decisions during the crucial circumstances even in the absence of the principal. In case of Indian real estate, a person with General Power of Attorney can perform duties including financial transactions, buying insurances, signing checks, filing taxes, settling claims and buying and selling a property.
Durable Power of Attorney – The Durable Power of Attorney has a validity of lifetime and is said to be invalid only in case the principal cancels the same. A clause can be added to the Durable Power of Attorney stating that the present PoA will remain intact if in case the principal suffers from physical or mental illness due to which he/she cannot perform his/her duties properly.
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3. Points to consider by NRIs while Executing PoA
Execution – The principal is not required to mark his/her physical presence in India every time for the execution of PoA. In fact, the PoA can be registered in his/her home country via the Indian Embassy. The NRIs can register Power of Attorney via two methods that include Legalization and Apostalization.
Legalization – It is important to notarise the PoA from an authorized officer of the Indian Consulate/Embassy under Section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948. It is also important to get PoA stamped within 90 days from the date of receipt in India. The Stamp duty can be implied when the deed is presented for registration in India and the same is payable as per the Section 2(17) Schedule-I of the Indian Stamp Act, 1899.
Apostalisation – Outside India, a PoA can be executed by following the Apostalisation procedure that is governed by Hague Convention, 1961. Under this, an apostille certificate is essential to be produced for the confirmation and verification of a person’s signature who is executing the deed. Although, the deed must be drafted according to the Indian laws like the Indian Registration Act, 1908 and the Power of Attorney Act, 1882.
4. Process to Execute PoA by the NRIs
Here in India, the Non-Indian residents have to get the PoA executed in the office of Sub-Registrar. Remember that the Power of Attorney should be framed on a non-judicial stamp paper of Rs.100. Other than this, two legal representatives and witnesses are also required to execute the deed. All the persons taking part in the execution of PoA must have their valid ID proofs along with photographs. The PoA comes within 4-5 days after the execution is performed.
Registration – Getting the PoA registration done is not mandatory according to the Indian Registration Act, 1908. However, the order passed by the Supreme Court says that registration of PoA is must if the same has to be executed to sell a property. The registration must be done in the office of sub-registrar that falls within the jurisdiction of attorney’s residence.
Revocation – The Power of Attorney is said to be legal till the time principal is alive. Although, the principal has the right to revoke/cancel the PoA anytime as and when required. The PoA stands null and void in case the principal is declared insolvent or lunatic. The cancellation process of POA is similar to that of execution.
Accountability – The principal will not be held responsible for any wrong commitments done by the attorney as he/she is the person holding PoA.