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Power of Attorney (POA) Rules for Land Deals in Tamilnadu

Power of Attorney

Power of Attorney (POA) Rules for Property Deals

The Tamilnadu Registration Department has revised the rules of using the Power of Attorney(PoA). These changes are effective from 1st Dec 2012.
The purpose of these changes was to prevent misuse of Power of Attorney. Also, it aims to plug loopholes in the existing practices.

What is Power of Attorney

A power of attorney (POA) is a legal document giving one person (the agent or attorney) the power to act for another person (the principal). That means Power of Attorney authorizes a person to perform transactions on behalf of another.
 
There are different types of POAs that fall broadly under two categories. They are either a general power of attorney or limited power of attorney.

Situations when Power of Attorney is Useful

Power of Attorney is a useful method in many property transactions.

For Joint Development of a Property

When the Principal is willing to Develop the property with the help of a Promoter, the PoA comes in handy. This is known as Joint Ventures. In such cases, the Principal cannot rescind the PoA Deed.

For NRIs

Power of Attorney is very useful for NRIs to buy or sell properties. When an NRI wants to buy a property in India through a PoA, he/she need not give the property details in the PoA. This is so because the description of the property will be known only after the property is identified.

Other Situations when PoA is useful

The power of attorney for the land registration process in India can also be used by an individual who is bedridden or ill. Also useful for an aged person with health problems. There may be other circumstances when an individual is unavailable to conduct the transactions.

Life Certificate

What does the new Rule say?
POA holder should submit proof to the sub-Registrar that the Principal is alive. For this, a Registered Medical Practitioner or Gazetted Officer can issue a Life Certificate. These certificates are valid for 30 days only.
The new rules are applicable to all POAs registered since February 4, 2013. By law, POA is not valid once the Principal dies. 
 
In Tamil Nadu, POA holders carry out many property transactions on the basis of POAs. It might be so to avoid payment of stamp duty and registration fees.
 
There are many reports of POA holders selling a property after the death of the Principal. Buyers get into trouble when Legal Heirs of the property owner claim rights over it. Such cases end up in protracted legal battles. Some times, the Courts declare the Sale Deeds as invalid.

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Compulsory Registration of Power of Attorney Deed

Registration of PoA Deed is Compulosory if the PoA is granted after 1.12.2012.
Power of Attorney Executed Outside India
It’s clarified by the Registration Department that any Power of Attorney relating to immovable property executed outside India does not require compulsory registration. However, attestation by the Consulate Office is required. Consequently further document presented (based on such unregistered Power of Attorney executed outside India) can be accepted for registration.
Where to register the PoA?

PoA shall be presented in the SRO in whose jurisdictional area the property in whole or a portion of it is situated. Or, it can be registered in the SRO where the Principal ordinarily lives.

PoA Registered Outside Tamilnadu

POAs registered in other states can also be used for registering and execution of documents in Tamilnadu. However, in such cases the Registrar shall get written confirmation from the concerned SRO before proceeding with the registration.

Company/Partnership Firm/LLP

Authorising a person to execute and present a document on behalf of a Company/Partnership Firm/LLP by the Partners/Directors cannot be considered as a Power of Attorney. Since, all the Partners/Directors of the Company/Partneršhip Firm/LLP cannot execute a document, it becomes necessary for them to identify a suitable person to execute the document on behalf of Company/Partnership Firm/LLP through a resolution/ authorisation. This resolution/authorisation should be enclosed as part of the document.

A company/partnership firm/LLP can be appointed as PoA.

Supreme Court: No Transfer of Title Deed through PoA

By a Judgment in 2011, Supreme Court has made it clear, that  Property sales through the common practice of general power of attorney will not give ownership title to the buyer.
Well, these were done to, primarily, to avoid payment of Stamp Duty and registration fees on the Sale deed, and to avoid payment of capital gains tax. These transactions have also paved the way for the “safe investment of black money”.
“A POA is not an instrument of transfer in regard to any right, title or interest in an immovable property,” the bench said, after interpreting various provisions of the law concerning property sales. However, the bench said the judgment would not affect “genuine transactions” under the GPA. “For example, a person may give a POA to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance.” The court further said that a person can enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings. In that connection, he can execute an agreement of sale and grant a POA that will allow the developer to further sell the property to prospective purchasers.
 

Can PoA appoint a Sub-Agent?

Power Agent cannot appoint a sub-agent for registration of document. Consequently such documents shall not be accepted for registration.

Cancellation of Power of Attorney

A Power of Attorney executed can be cancelled. It should be done by registering a Deed of Cancellation. The Cancellation deed will have to be registered by the same authority who registered the PoA.
 

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