A power of attorney is the most useful document an absent owner has and the one most often drafted badly. It creates an agency, not a transfer. Acts within the attorney's authority can bind you. The scope of that authority and the consequences of exceeding it need careful drafting and review.
What it is, and what it is not
The Powers-of-Attorney Act, 1882 provides that the donee of a power may execute an instrument with his own signature, and do anything in his own name, by the authority of the donor, and that it is as effectual in law as if executed by the donor. That is the whole of its force. It gives your brother your hand, not your property.
The Supreme Court settled the other half of this in 2011, holding that a sale agreement, a general power of attorney and a will do not convey title, and that a transfer of immovable property can be effected only by a registered deed of conveyance. A power of attorney is therefore never a way to transfer property to the attorney.
Executing it from abroad
This is where documents fail most often, because the form that works in Melbourne is not the form the sub-registrar in Bengaluru will accept. The Registration Act, 1908 allows a document to be presented for registration by the person executing it or by his agent duly authorised by power of attorney executed and authenticated in the manner the Act prescribes. It then says that where the principal at the time of executing the power does not reside in India, the power must be executed before and authenticated by a Notary Public, or any court, judge, magistrate, Indian consul or vice-consul, or representative of the Central Government.
A foreign notary's act is not automatically recognised here. The Notaries Act, 1952 allows the Central Government to notify reciprocal recognition where the notarial acts of Indian notaries are recognised in that country, so recognition depends on a notification rather than on the seal. The Indian consular route avoids that argument.
A power executed abroad has to be stamped in India within the period the stamp law allows after it is first received here. In Karnataka an instrument not duly stamped is inadmissible in evidence until the duty and any penalty are paid, and a power that cannot be produced is a power that does not exist. Send it to your advocate here as soon as it is signed rather than carrying it on your next visit.
How to limit it
- Describe one property, precisely. Survey number, khata number, apartment number, address and extent. Never "all my properties in India".
- List the permitted acts and close the list. Present a named deed for registration; represent you before the corporation for khata; sign and file a tax return; institute or defend a named suit; deal with a named tenant. Then say the attorney has no power other than those listed.
- Exclude the dangerous powers by name. No power to sell, gift, mortgage, create any charge, enter into a joint development or development agreement, deliver possession, or compromise a suit, unless one of those is genuinely the reason for the document.
- Separate signing from receiving. If you do give a power to sell, give the power to execute the deed and withhold the power to receive the consideration, directing that it be paid only into your own non-resident ordinary account. That single split prevents most of the losses in this area.
- Put an expiry date in it. Six months or a year, renewable. A power with no end date circulates for a decade and gets used for something you had forgotten about.
- Register it where it creates an interest. The Registration Act makes registration compulsory for non-testamentary instruments that create, declare, assign, limit or extinguish any right or interest in immovable property above a small statutory value. Whether a particular document creates such an interest depends on its terms and legal effect. Payment, possession or the label "irrevocable" should not replace that assessment. Check registration and stamping requirements for the actual instrument.
Revocation, and the trap in it
The Indian Contract Act, 1872 provides that an agency is terminated by the principal revoking it, by the agent renouncing it, by the completion of the business, by the death or unsoundness of mind of either, and by the principal's insolvency. So an ordinary power ends on your death, which is one reason it is not an estate plan.
The exception is the one to watch. Where the agent himself has an interest in the property that forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of that interest, and the Act's illustrations show that such an authority is not ended even by the death of the principal. An irrevocable power coupled with interest is a real and enforceable thing. Do not sign one because a developer's lawyer says it is standard.
When revocation is legally available, use a clear written instrument and check whether registration is needed in the circumstances. Give effective notice to the attorney and relevant third parties. Under section 208 of the Contract Act, termination takes effect against the agent and third parties when it becomes known to them, subject to the applicable rules.
Before you sign
Check the property's own position first. Our guide on viewing the encumbrance certificate online in Karnataka shows what is registered against it, and our guide on the verification checklist for property disputes sets out the records worth pulling before you authorise anyone to act. Where the property is held jointly with siblings or came from an estate, a power from you alone does not solve the wider problem, as our guide on whether one legal heir can sell without the others explains.