Designating an individual as a power of attorney in India makes that person an agent, attorney-in-fact or attorney-in-charge, and the subject of POA is a principal. An agent can only exercise power when the subject is not present to sign important documents for a transaction.
In addition, when the subject is not in good health or cannot act on their own, POA becomes effective.
Power of attorney or POA is a legal document that gives an attorney in charge the power to act for someone else in specific situations. It is mostly exercised in case of illness or disability of the principal. An agent can have a broad or limited authority to make decisions related to finances, investments, property or medical care.
POA expires if or when the principal passes away, revokes its term or is declared invalid by the court. It can also lapse after a legal divorce if their spouse was a power of attorney. Sometimes when an agent is not able to perform their set duties, the right to exercise this power expires.
As you have now learned the basic definition of POA, let's discuss further how it works.
It all begins with the principal choosing a trustworthy POA who is responsible and can carry out the duties. Documents for Power of Attorney can be obtained through a lawyer or even online from reliable websites. Along with the agent and principal's signature, it requires the presence of a third person as a witness.
Power of Attorney Act of 1882 oversees a power of attorney fulfillment in India. According to the law, a POA agent can have the right to the following:
Based on the legal spaces where agents can access their power, the Act has categorised the following types of POA.
The types of power of attorney in India are as follows:
Its name clears the agenda that general power of attorney provides an agent with a broad scale of responsibilities. This includes matters of taxation, finance, property, management etc. GPA is mainly used at times of buying or selling properties.
In most cases, when a buyer or seller is located elsewhere but needs an immediate transaction regarding the property, an agent acts in his power.
Unlike GPA, special power of attorney has limited functions. This kind of authority is only shared when a representative is required for a specific case. Once the job gets done, the special power of attorney lapses.
The principal takes the authorisation away with the fulfillment of its purpose. An example of this situation can be when an agent is authorised to appear and oversee the registration process of the principal's property.
Although the power of attorney agreement comes to an end with two conditions, one, if the principal dies, secondly, if the principal's purpose has been fulfilled for which he needed an agent.
However, there can be a situation that requires an agent to keep working on behalf of his/her principal. Thus, it means a power of attorney becomes durable. If you are hiring an agent for any such purpose, ensure this is clearly stated in the draft.
As the name suggests, agents exercise their power in medical or healthcare decisions. It can only be exercised when a person hires an agent due to his/her serious health condition or disability.
Medical POA does not come into action with its commencement; instead, it becomes valid if or when the principal's health does not persist. Hence, some suggest to club the medical POA under the durable POA.
POA for property is another branch of general power of attorney. Since GPA has a wide spectrum of legalities that a representative is a part of, it most certainly includes the realty sector. This suggests an agent can carry out formalities like leasing, buying, or selling a property.
This practice benefits both the principal and agent and is highly prevalent in India. Mainly because with the change in titles of land, the buyer has to pay stamp duty and registration fees to the government. If someone takes the help of GPA, these extra charges can be avoided.
However, the supreme court verdict in 2011 denied GPA’s function in transferring the right, title and interest of immovable property. It further states that general power of attorney is only created to favor the grantee. Even an irrevocable POA cannot affect transferring title to the recipient. Thus, general power of attorney is not valid for buying or selling any property.
On the other hand, the high court declared that in certain cases, buying a property using GPA will be allowed. It also added that GPA could be used at times of executing sales agreements when a developer and land owner are present.
In terms of eligibility, a power of attorney in India must be above 18 years of age. Other than this requirement, you can choose anyone you feel like as your POA. Most people select their spouse, child, relative or close friend. Choosing a POA is not about appointing someone to who you are the closest but who will be able to take the responsibilities.
Below mentioned are certain characteristics you must check prior to selecting a power of attorney:
Sometimes people wonder whether they can appoint multiple POAs. The answer to this query is yes you can choose multiple Power of Attorneys. A principal can also decide whether they will function together or separately.
Multiple POAs can sometimes be helpful, as they can discuss the issue among themselves and make a unanimous decision. In another way appointing more than one POA is like having a backup for emergencies.
A grantor or a principal can revoke power of attorney at any time until they have a sound mind. Before cancelling the authority of POA, a principal must provide it in writing to the concerned person. They must also sign a revocation letter in the presence of a notary public and then deliver it to the agent.
Power of attorney for NRIs stands for someone based abroad who appoints a POA to complete particular tasks. It includes property sale or purchasing, managing finances etc. This is because NRIs generally have property or a bank account in India that requires regular maintenance. Since it is not possible for them to regularly come back and forth, they appoint a POA.
It is compulsory to validate a POA for a non-resident Indian on a stamp paper as the Indian law states. A person who is appointed a POA must authenticate their signature by the Indian embassy in their country:
These are the following steps an NRI needs to follow to execute the same POA.
Step 1: Prepare a draft for POA with their signatures.
Step 2: Visit the Indian embassy or Consulate in their country and get the POA signed.
Step 3: A grantor can also notarise the deed by any public notary in their country.
Step 4: Send the attested deed via post to their Indian address.
Step 5: The person who receives this deed in India must register it in an Indian Sub-Registrar Office or Sub- Divisional Magistrate Office.
Step 6: Completing the process after paying the charges as applicable in that particular Indian state.
Now, with all the information in hand, you have successfully learnt the basics about power of attorney in India. It may seem difficult at first, but studying each attribute will make you more aware of these legal facts. You must always remember a POA can only be executed with the principal’s permission. It is up to the grantor to decide when to lapse the authority except for situations when they have passed away.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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