Power of attorney Its meaning & Significance
Power of attorney – Its meaning & Significance Power Attorney
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 favour 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. Earlier the power of attorney was signed by the principle only, however now days the power of attorney is signed by the principal and accepted by the agent. The validity of power of attorney is up to 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 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. A power of attorney is, as is well-known, a document of convenience.
Besides the Indian Contract Act, the Power of Attorney Act, 1882 deals with the subject. Section 1 A 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 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:
- Ensure that it is duly registered (in property cases) and the stamp duty prescribed by the State has been paid
- Signatures and photographs of the principal and power agent must be affixed.
- Check whether the principal has a valid title to the property and that his/her name is reflected as owner in government revenue records.
- 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.
- 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.
- 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.
- 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.
- Always check the availability of the original duly registered GPA.
- You must also check whether the description of the property (schedule of property) is in order.