From the past 17 years, NRI Legal Services has been providing legal services to NRIs. We do the property search, Partition of property, transfer of property, POA, making a will and all other sorts of property related services. Learn more on nrilegalservices.com
POWER of ATTORNEY
A General Overview of the Concept
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POA is a legal instrument
Empowers a specified person to act on behalf of the person executing it
Gives authority to make legal and financial decisions on grantor’s behalf
Parties involved -
The person granting the POA is referred as the ‘principal’ individual involved or the ‘donor’ or ‘grantor’
The person who stands to attain the POA is referred as the ‘donee’ or grantee’ or the ‘agent’. Remember, an agent need not be a lawyer to hold a power of attorney.
In India, issues related to the Power of Attorney are governed by the ‘The Powers of Attorney Act, 1882 – applicable to the entire country except Jammu & Kashmir.
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We live in a world of multi tasking, business structuring/restructuring and increasing global commercial activities
Commerce at a global level would come to a standstill if people had to be everywhere to perform all tasks themselves
Important to have some agency authorized to represent us for various business and legal purposes
In other words, we need to give somebody else the ‘power’ to act on our behalf
Along with this, for our own safety we would need to declare the exact sphere within which the authorized person can represent us or perform certain functions on our behalf
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India has become a hub for property investments
NRIs have the right to buy commercial or residential property in India
There is no limit to the property they can buy
However they can’t buy agricultural land or farm houses or even plantations – neither can they be gifted these - but can gain it in inheritance
There are various aspects that need to be comprehended and adhered to, as far as property issues are concerned
It is imperative therefore that they have full knowledge on this issue and understand how to protect themselves from any harassment
Living overseas limits NRIs to travel back and forth to India to sort property disputes – hence the need for POA.
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In case of any POA three aspects need to be very clear in the minds of people opting for it
the purpose of creating the document
the powers that are being vested in the agent
the method in which the document would finally be brought to an end
It is a universally accepted fact that all documents relating to a POA must be interpreted strictly-It is assumed that the POA grants only that power as is specified in the document.
POA issuance and implementation 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.
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Two types – GENERAL and SPECIAL
GENERAL
authorises the agent to act for the principal person in all matters, or in all matters of a particular nature or generally in respect of a general business.
document executor gets the power to do everything that an actual owner can do in regards to a particular matter including the power of sale.
whatever the person can do himself, he is authorising another to do.
needs to be titled as the ‘General Power of Attorney’ for greater clarity.
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SPECIAL
Authorises the representative agent to represent the principal party only in context of some particular specified activity e:g recovery of a particular debt.
Is a restrictive POA and titled as a ‘Special Power of Attorney’.
Usually, it is clearly mentioned that no sale, exchange, gift or mortgage of a property, for instance, is to be carried out.
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Distinction between a general and a special POA is important to the extent that it determines the nature and extent of the authority that is being bestowed through the POA
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 in India
An NRI has to sign the POA in front of either a notary or a consulate officer in whichever country he resides
Also, for any POA to be sanctified in the case of NRIs, the document must be notarised and signed by the Indian High Commission and other such authorities
It is then sent to India for ratification and within three months of the issuance, the endorsement process in India has to be completed
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Due to ignorance of law, people often fail to make a proper Power of Attorney.
Before anybody signs his name to legal contracts, careful consideration needs to be given to who is chosen choose to grant those powers, and whether any time limits are to be imposed
The lack of properly drafted and executed Power of Attorney can lead to a lot of complications when an individual is incapacitated due to severe illness or injury rendering him/her, unable to travel, unable to make decisions or manage financial and medical affairs.
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To avoid the frequently reported fraudulent cases in the context of POAs, the Government of India has now put checks to regulate the entire process
A surcharge of 2% is needed to be paid now if the General Power of Attorney (GPA) is granted to anybody who is not a blood relative.
Government also interested in discouraging the issuance of POAs
Hence, strong checks are put on the methodology and implementation of POAs
If a POA is issued for purposes of sale of property, a form needs to be filled to mandatorily state whether the sale proceeds would be deposited in the owner’s account or the POA holder’s account
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The validity of a POA needs special mention
Termination or revocation of a POA can happen only if one of the two holders dies or through some other legal methodology
A specific Revocation deed will need to be undertaken for this process to be completed
All such procedures that are carried out in the Indian context are always done so under the ambit of the Power Of Attorney Act, 1882.
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For further details and specifics related to the issue of
Power Of Attorney, refer to our Services section on the website – www.nrilegalservices.com
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