Introduction
A person shall understand that a General Power of Attorney (GPA) does not transfer ownership of immovable property in India. Property transfer shall take place only through a registered sale deed as per law. Courts have clarified that misuse of GPA for sale transactions is not legally valid.
What Is A GPA And What Shall It Not Do?
A General Power of Attorney is an authorisation given by one person, known as the principal, to another person, known as the agent. The agent may act on behalf of the principal in specified matters. A GPA shall not transfer ownership rights in immovable property. Ownership shall pass only through a registered sale deed under the Registration Act, 1908. The Supreme Court in clarified that transfer of property through GPA alone is invalid. The Court held that such transactions do not convey title and cannot be treated as legal ownership.
When Shall A GPA Be Used In Property Transactions?
A GPA may be used as a facilitating document in a property transaction. The GPA holder may act on behalf of the real owner in executing documents. For valid use, the GPA shall be registered if it relates to immovable property. The document shall clearly authorise the agent to sell the property, fix consideration, and execute documents. However, the actual transfer shall occur only through a registered sale deed. The GPA holder may sign the sale deed on behalf of the principal. In such cases, the ownership shall pass from the real owner to the buyer, not from the GPA holder.
What Shall Be The Legal Position Of GPA Sales?
A transaction based only on GPA without a registered sale deed shall not be legally valid. Courts shall not recognise such a buyer as the legal owner of the property. Such arrangements were previously used to avoid stamp duty and registration charges. However, authorities and courts now discourage such practices. Financial institutions may also refuse loans for GPA-based properties due to unclear title. Under property and registration laws, a valid title shall require proper execution and registration of the sale deed.
What Shall A Buyer Or Seller Do In GPA Transactions?
A buyer shall ensure that the real owner executes a registered sale deed. The GPA may be used only for convenience, such as when the owner resides abroad. The buyer shall verify title documents, encumbrance certificate, and chain of ownership. A legal opinion may be obtained to confirm clear title. A seller may execute a GPA for limited purposes. The GPA shall be clearly drafted and registered. The seller shall ensure that the final transfer is completed through a registered sale deed in favour of the buyer.
What Shall Be The Remedy If A Person Has Purchased GPA Property?
A person who has purchased property through GPA alone shall not have full legal ownership. Such a person may only have contractual rights. The person may file a civil suit for specific performance. This action shall compel the real owner to execute a registered sale deed. If execution is refused, the person may seek refund and compensation under the Indian Contract Act, 1872 or the Consumer Protection Act, 2019.
Conclusion
A GPA shall serve only as an authorisation and not as a mode of property transfer. Legal ownership shall arise only through a registered sale deed. A person shall exercise caution while dealing with GPA properties. Proper legal compliance shall ensure valid title and prevent future disputes.
