Updated : September 12, 2024Power of Attorney Meaning & Significance
Overview : A Power of Attorney is a legal document that grants a designated person the authority to make decisions on behalf of another person about his finances, medical care or any specific set of activities. The execution of a POA is done by creating a written document where the principal grants certain rights to be specifically performed by the agent. Dive deeper into the Power of Attorney meaning and what precautions should be taken while execution of POA in connection with Real Estate.
If you don’t know exactly about what is a power of attorney, then no worries, you are not alone? Let us explain it! A power of attorney is a document by execution of which rights with respect to specific activities as mentioned in the power of attorney is granted in the favor of his/her agent. The execution of a power of attorney is done by creating a written document where the principal grants certain rights to be specifically performed by the agent. Thus, a power of attorney holds great significance as a legal document.
Earlier, the power of attorney was signed by the principal only, however nowadays the power of attorney is signed by the principal and accepted by the agent. The validity of power of attorney is upto the term for which it is issued but in case there is no fixed term mentioned in the power of attorney then it is valid until it is revoked by the principal or till the time the principal is alive.
A grant of power of attorney is essentially governed by Chapter X of the Indian Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent.
The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. With the above explanation on POA, you can understand the power of attorney significance in the business landscape. Simply put, it is a well-known document of convenience of transferring authorization from one person to another for specific purposes.
Besides the Indian Contract Act, the Power of Attorney Act, 1882 deals with the subject
Section 1A of the Power of Attorney Act defines power of attorney to include any instruments empowering a specified person to act for and in the name of the person executing it. Section 2 of the said Act reads, thus:
Execution under power-of-attorney – The donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the powder: and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal of the donor thereof.
To learn difference between General Power of Attorney and Special Power of Attorney; Click Here
Precautions while executing Power of Attorney in connection of Real Estate:
Following are the precautions which need to be observed while creating a power of attorney especially if it relates to sale and purchase of property or general power of attorney.
| S.No | Precautions |
|---|---|
| Ensure that it is duly registered (in property cases) and the stamp duty prescribed by the State has been paid | |
| 2. | Signatures and photographs of the principal and power agent must be affixed. |
| 3. | Check whether the principal has a valid title to the property and that his/her name is reflected as owner in government revenue records. |
| 4. | Verify whether a sale clause is mentioned in the POA |
| 5. | For availing loans based on a POA, check whether the power agent has the authority to sign loan documents and can create an equitable mortgage in favour of banks/financial institutions on behalf of the principal. |
| 6. | Ensure that as on the date of execution of any document based on the POA, the POA is in force and the principal is alive. |
| 7. | In case a POA is granted by a builder (private or public limited company) to their employee, ensure that a certified copy of supporting board resolution authorising the power agent is produced. In case the builder is a partnership firm, check whether all the partners have authorised in writing any specific partner or their employee to act as power agent. |
| 8. | If the POA is being executed abroad, ensure that it is either notarised or signed before Indian Consulate officials and then duly adjudicated within 120 days from the date of execution of the said POA. |
| 9. | Always check the availability of the original duly registered GPA. |
| 10. | You must also check whether the description of the property (schedule of property) is in order. |
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Conclusion
Power of Attorney holds a significant importance as a legal document as it grants some specific authorization to a person to act on behalf of a principal. Earlier, a POA was signed by the principal only, however these days it is signed by the principal and also need to be accepted by the agent. We hope the above described information on POA and precautions while execution of POA in connection with Real Estate have helped you understand it better.
