Buying Property on Power of Attorney? Here’s the Legal Truth No One Tells You

In India, property is one of the most valuable assets for individuals and families. Every transaction involving land, a house, or commercial space is significant—not only financially but also emotionally. Because of this, people often look for the fastest, easiest, and most profitable way to sell or buy property.

However, many misunderstandings exist about the role of Power of Attorney (POA). A very common question people ask is:

👉 “If I give someone a Power of Attorney, does that person become the owner of my property?”

👉 “If I buy a property through Power of Attorney, will I become the legal owner?”

The short answer is No. But the real explanation is more detailed. This article will help you understand what exactly a Power of Attorney is, its types, its legal limitations, and why it is not a substitute for ownership.

We will also look at the risks of using POA for property deals, the difference between notarised and registered POA, and what courts have said about such transactions.

By the end, you will clearly know whether Power of Attorney can transfer ownership rights or not—and how to protect yourself from frauds and future legal complications.

Buying Property on Power of Attorney? Here’s the Legal Truth No One Tells You

What is Power of Attorney?

The Power of Attorney Act, 1882 defines POA as a legal document through which one person (called the Principal) gives authority to another person (called the Agent or Attorney) to act on their behalf for certain tasks.

  • If you are the property owner but cannot personally be present for a transaction, you can authorize someone else through POA.

  • The agent can then perform specific acts for you—like signing documents, attending registration, handling banking, or representing you in court.

So, Power of Attorney is only a tool of delegation. It does not create ownership. The ownership always remains with the Principal unless it is transferred by a proper registered sale deed, gift deed, or will.

Types of Power of Attorney

POA is broadly of two types:

  1. General Power of Attorney (GPA)

    • Gives wide powers to the agent.

    • Example: A son going abroad gives GPA to his father to manage all his properties, bank accounts, court cases, and daily affairs.

    • Useful for overall management.

  2. Special (or Specific) Power of Attorney (SPA)

    • Given for one specific task only.

    • Example: Authorizing someone only to appear before the registrar for registering one particular property.

    • Once that task is completed, the SPA ends.

👉 Important point: Whether GPA or SPA, both are only authority letters. They do not themselves transfer ownership.

Who Can Give and Receive POA?

  • Any adult of sound mind can give or receive a POA.

  • Multiple people can jointly give POA to one person, or one person can appoint multiple agents. This is called Joint POA.

  • In practice, POA is often used between close family members, business partners, or trusted associates.

What Can an Agent Do Under POA?

The agent can only do those activities that are specifically mentioned in the POA. Nothing beyond that.

For example:

  • If POA authorises the agent to collect rent, he cannot sell the property unless selling rights are clearly mentioned.

  • If POA authorises to attend court cases, the agent cannot operate the bank account.

Thus, the wording of the POA is extremely important.

Notarised POA vs Registered POA

This is where many people get confused.

  1. Notarised POA

    • Done before a notary public.

    • Commonly used for routine matters like bank work, litigation, or managing property when abroad.

    • Not valid for sale/transfer of immovable property.

  2. Registered POA

    • Must be executed before the sub-registrar of the area.

    • Required if POA involves transfer of rights in immovable property.

    • Carries more legal weight, but still, by itself, does not transfer ownership.

👉 For property transactions, a Registered Sale Deed is mandatory, not just POA.

Why Power of Attorney Cannot Transfer Ownership

Indian law is very clear:

  • Transfer of Property Act, 1882 says ownership of immovable property can be transferred only by a registered instrument like a Sale Deed, Gift Deed, Release Deed, or Will.

  • Supreme Court Judgment (Suraj Lamp & Industries Pvt Ltd vs State of Haryana, 2011) declared that “GPA sales” do not convey ownership. At best, they allow possession and management, but not legal title.

This means:

  • If you buy a property only on the basis of GPA, you are not the legal owner.

  • Tomorrow, the original owner (or their heirs) can challenge your claim.

Common Misunderstandings About POA

Let us break some popular myths:

  1. “If I buy a property on POA, I am safe.”
    ❌ Wrong. You are only getting possession or management rights. Ownership is not transferred.

  2. “A notarised POA is enough for sale.”
    ❌ Wrong. Sale of property requires registered sale deed with payment of stamp duty.

  3. “If I hold POA, I can sell the property and become the owner.”
    ❌ Wrong. You can sell on behalf of the owner only if authorised, but the sale deed must still be in the buyer’s name, not yours.

  4. “Family POA is always safe.”
    ⚠️ Partially true. It is safer within family, but legal procedures still need to be followed.

Risks of Property Deals Through POA

Many frauds have happened in India because of misuse of POA. Here are some risks:

  • Fake POAs: Forged documents shown to sell property.

  • Multiple POAs: Same property sold multiple times by misusing different POAs.

  • Unregistered POA: Later challenged in court as invalid.

  • Death of Principal: POA automatically becomes invalid upon death of the person who gave it. Buyers often don’t realise this.

  • Stamp Duty Evasion: Some people try to avoid paying high stamp duty by using POA deals. This is illegal and risky.

👉 Courts have repeatedly warned citizens not to rely only on POA for buying immovable property.

Safe Use of Power of Attorney

POA is not always dangerous—it is very useful when used correctly. Here are safe ways:

  • Use registered POA for property-related powers.

  • Always verify identity of Principal and Agent.

  • Clearly define scope of authority in the POA.

  • Check whether POA is still valid (not revoked or expired).

  • For NRI property transactions, follow proper consulate authentication procedure.

Example Cases

  1. Case 1 – NRI Owner
    An NRI living in the US gives a registered POA to his brother in Mumbai to sell his flat. The brother sells the flat, signs the sale deed, and receives money on behalf of the NRI. The buyer becomes the legal owner because the transaction was completed through a registered sale deed, not just the POA.

  2. Case 2 – Fraudulent GPA Sale
    A man “sells” his land to another person by giving only GPA and not registering a sale deed. Later, his heirs challenge the transaction. Court rules that GPA sale does not confer ownership, so the buyer loses the property.

  3. Case 3 – Limited Authority
    A son gives POA to his father only to collect rent. The father tries to sell the property. The court rejects it because sale rights were not given in POA.

Precautions for Buyers

If you are planning to buy property where POA is involved, keep these points in mind:

  1. Insist on a Registered Sale Deed. Never rely only on POA.

  2. Check Title Documents of the property.

  3. Verify POA Registration. Visit the sub-registrar’s office if needed.

  4. Consult a Property Lawyer before finalising.

  5. Avoid Cash Deals. Always record payment legally.

Stamp Duty and Registration Rules

  • In Maharashtra (and most states), POA involving family members for no consideration has concessional stamp duty.

  • For commercial POA (like authorising a broker or friend), stamp duty is higher.

  • Without proper stamp duty and registration, POA is invalid for property dealings.

Key Legal Principles

  • Ownership = Title. Title can only pass through registered deed, not POA.

  • POA = Authority. It only allows action on behalf of the owner.

  • POA ends on death. It is not a permanent right.

  • Court Position: GPA sales are not valid.

Conclusion

Property is too valuable to risk through shortcuts. Power of Attorney is not ownership. It is only a legal arrangement to manage property or complete a transaction on behalf of the true owner.

If you want to sell property, always execute a registered sale deed and pay proper stamp duty. If you want to authorise someone, use a registered Power of Attorney with clearly written powers.

Remember the old saying: “Greed brings grief.” If someone offers you a higher price but asks only for a notarised POA, be careful—you might end up in court for years.

👉 Golden Rule: Never buy property only on POA. Always insist on a registered sale deed.

By understanding the real legal meaning of Power of Attorney, you can avoid costly mistakes, protect your property, and ensure smooth transactions.

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