NRIs use Power of Attorney (‘POA’) as an instrument to appoint an agent/attorney to help them sell their properties in India. NRIs find it difficult to come to India and sell their property, and hence, the concept of a power of attorney exists. A power of attorney authorizes its holder to enter into transactions and take decisions on behalf of the actual owner of the property.
Special Power of Attorney for Purchase of Property: India Format
You can find the format of a power of attorney here,. You should draft a POA on a green stamp/bond paper or a non-judicial stamp paper of INR 100. The NRI should authorise the power of attorney himself and the Indian Consulate in the country of residence. Once authorised, the NRI should send a power of attorney to the sub-registrar’s office and relevant witnesses, identity proofs, and photograph copies.
You should include certain clauses in a PoA to ensure that no loopholes could pose a threat to the NRI/owner/principal in case of a dispute. Some of these clauses are:
Full details of the parties, including relevant information such as name, age, address, occupation, etc.
The reason for entering into this agreement (sale or purchase of property by the NRI in India)
Termination clause to ensure that the power is not misused beyond the fulfillment of the objective of this agreement.
The clarity in the specific powers granted to the agent and the attached responsibility.
Power of Attorney by NRI to Buy Property in India
NRIs often purchase property in India for investment purposes or to have a visiting home/holiday home. However, most NRIs do not have the time to come to India to execute the Sale Deed/Agreement for Sale transaction. Therefore, a power of attorney for purchase of property by an NRI facilitates sale transactions legally. Moreover, NRIs would require a special power of attorney to execute a transaction. Through a general power of attorney, no NRI would be able to sell or purchase property in India.
A special power of attorney gives an agent the power to act on behalf of the principal (NRI) for a specific matter, including but not limited to taking legal or financial decisions.
To have an effective POA for the purchase of property, an NRI must sign the POA agreement in the presence of a consulate officer or Notary in the country of residence. Further, such consulate officers must attest to the agreement for it to be valid. The NRI should register the POA under the Indian Registration Act, 1908, to make it valid and enforceable in India.
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Power of Attorney to Sell Property in India
Power of attorney to sell property in India also requires authorization from the country of residence. Let us examine a few countries of residence and the procedures related to power of attorney therein.
An NRI must book an appointment with a Notary in Australia where the NRI and two witnesses and the Notary officer would sign the POAon a green stamped or bond paper.
After notarizing the POA, you would send it to the Indian Consulate, who would stamp it with an Apostille by the Department of Foreign Affairs (DFAT) and then send it back to India to the appropriate authority duty charges prescribed by the local government.
Then, you can register the agreement, and the transaction can legally take place.
There is a 3-step process when an NRI from the UK wishes to purchase or sell property in India.
Firstly, an attorney from India must draft the POA according to the needs of both parties and according to the applicable laws (ICA, 1872, or RERA, 2016, etc.) in India.
Secondly, the POA must be sent to the place of residence, i.e., the UK, where you can get it notarized by a Notary Public for a charge between 20 to 100 pounds. The concerned NRI, along with two witnesses and the Notary, will have to sign the document. After notarization, the Indian Consulate, located at the Indian High Commission, London, would attest the same.
Thirdly, the document can be sent to the attorney in India where registration happens, and the transaction can legally take place.
There is a 3-step process when an NRI from the US wishes to purchase or sell property in India.
Firstly, an attorney from India must draft the POA, and the NRI and two witnesses should sign this agreement. The notarization of the document should be done in the presence of a Notary Public. Further, it must be sent to the Indian Consulate for his/her signature. An appropriate fee would be charged for attestation, notarization, etc.
Secondly, the POA must be sent to the Secretary of State for an apostille from the Department of State, Authentications Office, which will use the Seal of the US Department of State to authorize the document's validity will be sent overseas.
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Thirdly, the agreement shall be sent to the attorney in India for the legal execution of the transaction.
The POA is a powerful document and must be drafted between two parties that trust each other. The agent must be selected with caution as the agreement would transfer significant power to decide the owner/principal to the agent. A poorly drafted agreement that does not consider the risks involved (such as consideration, percentage of share between co-owners, obligations of agents, the role of decision making by an agent, etc.) would cause litigation which would severely affect the parties.