Understanding the difference between GPA and SPA

Overview : A Power of Attorney (POA) is an essential document allowing a person (called, a principal) to grant authority to another person (called, an agent) to act on behalf of him. There are several differences between General Power of Attorney and Special Power of Attorney, based on their Authority Scope, Duration of Applicability, Revocability, etc.; which are two forms of POA! Dive deeper into differences between GPA and SPA or simply put, spa vs gpa by going through the post!

Introduction

In the context of legal matters, a Power of Attorney (POA) is considered a pivotal document for granting authority from one person/party, called the Principal, to another person/party, called the Agent or attorney. In general, there are two forms of power of attorney; General Power of Attorney (GPA) and Special Power of Attorney (SPA).

These two forms of POA vary in Scope, Purpose, Duration, and Process. This piece of writing helps you gain insight into the General Power of Attorney vs Special Power of Attorney, along with elucidating their advantages, disadvantages, documents required, and procedure of execution.

Understanding General Power of Attorney (GPA)

A general power of attorney is created to give the right to another person to exercise the activities on behalf of the principal, for all purposes which are general in nature. This kind of power of attorney confers on the agent an authority to make decisions that are not specific and can be related to legal, medical, financial & business decisions of the principal.

Understanding Special Power of Attorney (SPA)

A Special Power of Attorney (SPA) is specific to property matters where the principal grants authority in favor of the agent to make decisions on behalf of the principal and to conduct various activities as per those decisions. The special power of attorney (SPA) is irrevocable and the principal must ratify all the activities done under the special power of attorney.

Differences between General Power of Attorney and Special Power of Attorney

There are several differences between General & Special Power of Attorney. Exploring the differences can help you dig deeper into these two forms of Attorneys. Take a look at the below-listed differences between GPA and SPA at various aspects

Scope of Authority: In GPA, a broad authority grants extensive powers to the agent. On the other hand, limited or restricted authority is granted for carrying out any particular tasks or transactions under SPA.
Objective: The purpose of GPA is to grant authority to a trusted party to act on behalf of the principal in diverse matters such as property, finances, legal representation, and decision-making. While, SPA grants authority for specific purposes or transactions i.e. property sales, lease agreements, or litigation.
Flexibility: GPA offers flexibility and authorizes the agent to act in multiple matters and transactions on behalf of the principal. Whereas, SPA is not so flexible as it confers authority for designated tasks & transactions.
Duration: Power or authority granted under GPA remains effective until its revocation or termination by the principal or in cases like the principal’s incapacitation or death. In SPA, the duration authority to the agent is either fixed or remains effective until the completion of the designated tasks/transactions.
Representation Authority: GPA allows broader representation authority to the agent on behalf of the principal, mainly in third-party dealings, institutions, etc. However, SPA grants limited representation authority to the agent solely for specific tasks.
Legal Formalities: GPA should be executed in accordance with the legal formalities and documentation specified under relevant laws consisting of notarization and attestation. SPA has similar legal formalities to GPA that ensure the legitimacy and enforceability of the document.
Revocability: The principal can revoke or terminate GPA at any time by following compliance and legal formalities. The authority granted under SPA can be revoked by the principal at any time or upon completion of the specified tasks.

Why is Power of Attorney required?

Power of Attorney is a legal document that allows a person to grant authority to another trusted person to act on his behalf in multiple situations. It can be beneficial in situations where an individual is not able to make decisions on his own behalf due to his unavailability or physical or mental incapacity significantly affecting his ability to make decisions freely.

Advantages of General Power of Attorney

The advantages of General Power of Attorney are numerous. Peeping into its advantages can help you choose the best form depending on your requirements. Some major advantages of this form of attorney are described below;

Extensive authority: This Attorney form grants extensive authority to the agent enabling him to act on several matters with no specific boundation.
Prolonged/Perpetual Nature: GPA has a prolonged nature as it will remain effective until the principal repeals it. Consequently, it provides ongoing assistance for an indefinite period without requiring multiple renewals.
Flexibility: It allows the principal to authorize the agent to handle their matters extensively on his behalf which may include financial transactions, property management, business operations, and also legal representations.
Efficiency: GPA enables the principal to streamline required decision-making, maintain continuity in his matters, and expedite transactions, especially in cases where he is not available or incapacitated.
Convenience: It makes the life of the principal convenient by allowing him to grant his discretion of decision-making in different aspects to any trusted agent so that he can handle his matters efficiently in his absence.

Disadvantages of General Power of Attorney (GPA)

Apart from multiple advantages, GPA has a few disadvantages as well. It’s crucial to understand the disadvantages associated with General Power of Attorney as it may help you decide which form of attorney would be suitable for your requirement. Some disadvantages of GPA are as below;

Risk of Abuse: Due to its broad-authority granting nature, GPA possesses the risk of misuse or abuse by the agent. Such misuses may include acting beyond their predefined scope of authority or engaging in unauthorized transactions.
Absence of Specificity: GPA doesn’t restrict the agent’s powers to any specific transaction or condition may create confusion regarding the extent of authority granted. Subsequently, it may cause potential disputes to arise over interpretation.
Complexity in Formalities: GPA execution is a complicated task as it requires the drafting of documents in compliance with prevailing laws, attestation, notarization, and registration. As a result, it can turn out to be a tedious and time-consuming task.
Difficulty in Revocation: Revoking GPA may involve complexities, especially in case the principal is not mentally stable or incapacitated to convey his intentions clearly. Revocation of GPA in such conditions may lead to potential disputes or legal proceedings related to the termination of the agent’s authority.

Advantages of Special Power of Attorney (SPA)

As the name implies, Special Power of Attorney is a special kind of attorney that is brought into use in specific conditions. Similar to General Power of Attorney, Special Power of Attorney also comprises a number of advantages. The primary advantages of SPA are described as below;

Specific Authority: SPA grants specific authority to the agent which is limited to a certain transaction or task. Simply put, the powers of the agent are restricted to the particular tasks or transactions depicted by the principal.
Precise Clarification: Unlike GPA, Special Power of Attorney clearly states the agent’s powers thereby reducing ambiguity and ensuring that the authority granted to the agent aligns with the principal’s intentions.
Customized Representation: SPA facilitates the principal to curb or customize the agent’s powers to meet their specific requirements, thereby allowing targeted representation and assistance for specific tasks or transactions.
Flexibility: Since SPA grants limited authority, it gives freedom to the principal so that he can appoint other agents for different tasks.
Focused Scope: By granting authority for particular tasks or transactions, SPA minimizes the risk of authority abuse or its misuse by the agent. As a result, it offers higher accountability and better control.

Disadvantages of Special Power of Attorney

Along with the aforementioned advantages, this form of Attorney has also multiple disadvantages associated with it. Without knowing about its disadvantages, one should never conclude what can work for them. Taking insights into both sides of a coin is always beneficial, the same applies to SPA. The major disadvantages of Special Power of Attorney are described below;

Restricted Applicability: It may have limited applicability beyond the tasks or transactions mentioned in the document and therefore requires execution of several SPAs for distinct tasks which can be arduous.
Rigidity or Non-Flexibility: Due to specific or limited authority granted through SPA, it may lack flexibility. This nature of SPA makes it unsuitable or minimally suitable for situations where the principal needs enduring assistance or representation.
Limited Tenure: This power of attorney is effective only for the timespan specified in the document or till the completion of the designated tasks/transactions. So, it doesn’t fit the long-term or ongoing representation.
Oversight Scope: In case, the principal may not properly anticipate the situations or tasks requiring representation, it may lead to authority gaps and difficulties in handling the designated affairs properly.

Document Required for GPA & SPA

AAs we all know documents play a crucial role in legal procedures, they also play a vital role in the initialization of either form of power of attorney. Certain documents are required for executing GPA and SPA which may include;

POA Form: A POA form that outlines the scope of authority to the agent as well as any specific terms or conditions imposed by the principal, should be duly filled and signed before final submission.
Identity Proofs: The valid identification documents of the principal and the agent such as a passport, driver’s license, or Aadhaar Card are required to verify the identities of the parties involved.
Witnesses Testimonials: The Signatures of the witnesses who are attesting to the execution of the POA document, along with their valid identity proofs are required.
Notarization or Attestation: As per the jurisdiction’s regulations, it may be required to notarize or attest the POA document by authorized officials to authenticate it.
Registration: Either form of POA may need to be registered with the relevant authorities to ensure its legal enforceability.

Process & Legalities Involved

According to the jurisdiction’s law & regulations, the legalities required for executing GPA and SPA may vary from one to another. However, a few legalities and procedures are common in both forms of POAs; those are:

Legal Capacity: The principal must be legally capable of authorizing POA. Simply put, the principal must be mentally healthy enough to make decisions and also understand the short & long-term consequences of his decisions or actions. His action or decision should be free from duress or external influence.
Documentation: Both two forms of POAs must be documented in writing, clearly delineating the scope of authority granted to the agent, the duration of the POA, and any specific terms or conditions imposed by the principal.
Execution: The execution of the document must be done in compliance with the prevailing law of the jurisdiction. The document execution may include document signing in the presence of witnesses, notarization, attestation, or registration with the dedicated authorities.
Revocation: The principal reserves his right to revoke either form of POA at any time by issuing a formal notice of revocation to the agent and associated third parties. Revocation should take place in compliance with the legal procedures specified under the applicable laws.

Conclusion

Navigating the realm of Power of Attorney (POA) requires a clear understanding of its types, namely General Power of Attorney and Special Power of Attorney, along with their nuances. Getting aware of the differences between GPA and SPA can help you opt for the right one as per your requirement, thereby aiming to strike a balance between authority and control.

Faq's

1.Can I revoke/terminate a Power of Attorney after its execution?

2.Is notarization required for the NOC?

3.Is it required to register a GPA or SPA with any government department or office?

4.Is it possible to appoint multiple agents in a single Power of Attorney?

5.Is there any specified format for drafting POAs?