Power of Attorney (POA) is a legal document that gives right or authority to one person (who is referred as an agent) to sign the documents on behalf of another (who is referred to the principal). The purpose of this law is to make it easy to designate a person to access your finances, legal or property related matters on your behalf. This appointed agent or legal representative can enter into a transaction or any other legal issues. In such cases, the other person’s signature is legally effective to the same extent as if the principal has signed the document.
Power of Attorney involves drafting of a document which specifies another person as an agent and assigns him the power to act as the legal representative. This law came into force on 1st May 1882 and is called 'Power of Attorney Act, 1882'. This act applies to the entire country of India, except Jammu and Kashmir.
Why is it important?
A power of attorney gives authority to a trusted person who takes a decision on one's behalf and relieves him or her of his duties. Many people confuse the power of attorney with a will, but both these documents are two different legal documents and perform different functions. A will comes into effect only when a person dies and Power of Attorney comes into effect during a person's lifetime and it ceases when he or she dies. One has to draft two different POA's, one for property and for personal care.
Types of POA
General Power of Attorney(GPA)
The agent has the right to carry out all legal activities on the behalf of the principal without any restrictions to a particular act or transaction. It grants broad powers to the agent to make decisions.
Special Power of Attorney (SPA)
This is a restricted service, where the agent is given authority to certain or specific legal activities. These activities are defined in the document. The agent’s power of attorney ceases on the completion of the transaction(s). Durable Power of Attorney (DPA). The power of attorney is effective for a lifetime unless it is cancelled. The specific clause in documents states that agent’s power is valid even if the principal has become incapacitated.
Use of Power of Attorney in Real Estate field
In real estate field, Power of Attorney is used to
- Sell, lease, grant, collect rents, borrow, exchange and mortgage
- Manage, settle, and compromise all matters relating to real estate
- Perform all activities related to bonds, contracts, banks, instalments
Regulations for Construction of Power of Attorney
- The Power of Attorney should be construed or defined to include all necessary powers for its execution
- The agent cannot act beyond his scope and bind the principal by his acts
- The principal cannot be sued or held responsible for the fraud done by the agent
Process of Drafting Power of Attorney
A power of attorney can be drafted or executed by any person who is eligible to enter into a contract with another person. As per Indian law, a Power of Attorney is a legal document and has to be properly written using the legal terms and it defines the objectives and responsibilities which the principal wants to authorise the agent to perform on his behalf. An affidavit has to be filed will all the necessary original documents, which will be verified by the court and if satisfied, the court will register power of attorney by putting seal and signature on it, this process will make the power of attorney valid. Then, it has to be signed and notarized by a certified notary advocate, who will, in turn, declare that the principal is competent at the time of signing the document and will issue the power of attorney. At the end, it needs to be executed and authenticated by the sub-registrar or registrar as per the ‘Registration Act, 1908’.
Revocation of Power of Attorney
The Power of Attorney can be revoked in the below cases:
- Revoked by the principal
- The principal becomes insane or becomes bankrupt or dies
- Based on the mutual agreement between the principal and the agent
- The transaction for which the agent was appointed is accomplished
A Power of Attorney is a legal document and has to be handled carefully. The principal should make sure that the agent is a trusted aide before he or she forms an agreement with him.