Buying Property Through a GPA: Why a Power of Attorney Sale Does Not Transfer Title

No. A GPA sale of property does not transfer ownership, however much was paid and however many documents were signed. Under Section 54 of the Transfer of Property Act, 1882, a sale of tangible immovable property worth one hundred rupees or more can be made only by a registered instrument, and the Supreme Court held in Suraj Lamp and Industries v State of Haryana (11 October 2011) that transactions built on a general power of attorney, an agreement to sell and a will "do not convey title and do not amount to transfer". What a GPA buyer actually holds is an agreement to sell that may support a suit, an agency that ends the day the seller dies, and a will the seller can tear up tomorrow.

Part of the property and real estate practice at S Jain & Attorneys, Bangalore.

This guide is for anyone offered a flat, site or house "on GPA" instead of a registered sale deed, and for anyone who already paid for one and is now being told it is theirs. It explains what a power of attorney can lawfully do, what happens on the seller's death or revocation, what stamp duty Karnataka charges on a GPA to sell, and how to convert a GPA purchase into real title. It does not cover the sale deed process itself, which our guide on sale agreement versus sale deed covers.

What is a GPA sale of property, and why does it not transfer title?

A GPA sale is a bundle of documents that stands in for a conveyance, and it fails because the law recognises only one way to sell immovable property. Suraj Lamp describes the pattern. The seller takes the full price and hands over possession, then signs an agreement of sale confirming payment and possession with an undertaking to execute any further document later, a general power of attorney, usually marked irrevocable, authorising the buyer or a nominee to manage, deal with and dispose of the property, and a will bequeathing the property to the buyer as insurance against the seller's death. The Court called both labels, "GPA sale" and "SA/GPA/Will transfer", misnomers, because there cannot be a sale by execution of a power of attorney, nor a transfer by an agreement of sale, a power of attorney and a will.

The judgment also records why people do it: to get around prohibitions or conditions on transfer, to avoid stamp duty and registration charges on a conveyance, to avoid capital gains, to park unaccounted money, and to avoid the unearned increase payable to development authorities on transfer. Sellers with imperfect title who cannot execute a registered deed, and buyers who want no public record of the deal, are the two groups the Court names. In Bangalore the same pattern clusters around revenue sites and properties on the B register, where a registered sale deed is hard to obtain or the seller prefers to avoid it. Our guide on e-Khata in Bangalore explains the A and B register distinction that usually sits behind the offer.

The statute is short. Section 54 of the Transfer of Property Act defines sale as a transfer of ownership in exchange for a price and says that such a transfer, for tangible immovable property worth one hundred rupees or more, "can be made only by a registered instrument". The same section adds that a contract for sale "does not, of itself, create any interest in or charge on such property". Section 17(1)(b) of the Registration Act, 1908 makes registration compulsory for any non-testamentary instrument that purports to create, declare, assign, limit or extinguish a right, title or interest worth one hundred rupees or more in immovable property, and Section 49 provides that a document required to be registered but not registered shall not affect the immovable property comprised in it, nor be received as evidence of any transaction affecting it.

Suraj Lamp then dealt with each piece of the bundle. An agreement of sale, "whether with possession or without possession, is not a conveyance" and confers no title. A power of attorney "is not an instrument of transfer in regard to any right, title or interest in an immovable property". It creates an agency: the grantor authorises the grantee to do specified acts on the grantor's behalf, which bind the grantor as if done by him. It is revocable unless made irrevocable in a manner known to law, and, in the Court's words, "even an irrevocable attorney does not have the effect of transferring title to the grantee". A will is a posthumous disposition, revocable at any time while the testator lives, and registering it makes it no more effective. Put together, the Court concluded, a SA/GPA/Will transaction "does not convey any title nor create any interest in an immovable property", the courts will not treat it as a completed transfer, and it cannot be made the basis for mutation in municipal or revenue records.

Key takeaway. Ownership of immovable property moves only through a registered deed of conveyance. A GPA, an agreement to sell and a will can support a claim to get that deed, but none of them is that deed, and the seller remains the owner on every public record until it is registered.

The table below sets the two routes side by side on the questions that decide whether a buyer is safe.

Three facts from the judgment and the statute explain why every other consequence follows.

What can a GPA holder lawfully do with the property?

A GPA holder can do exactly what the document authorises, in the owner's name and for the owner's benefit, including executing a registered sale deed that passes title from the owner to a buyer. Suraj Lamp is explicit that "an attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor". That is the lawful use. The owner is abroad, elderly or simply elsewhere, appoints a spouse, child, sibling or trusted agent, and the agent signs the conveyance as the owner's hand. The Court took care to say that its observations "are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions", giving as examples a power to a relative to manage affairs or execute a conveyance, and a development agreement under which a builder is empowered to execute agreements and conveyances for individual plots or apartments.

Two limits sit inside that authority. First, the holder acts in a fiduciary capacity. Quoting its earlier decision in State of Rajasthan v Basant Nehata, the Court said the donee "cannot use the power of attorney for his own benefit". A holder who conveys the property to himself under a GPA that was really a disguised sale is the exact transaction Suraj Lamp condemns. Second, the instrument must be one the registration system will act on. Section 32 of the Registration Act allows an agent to present a document for registration only under a power of attorney executed and authenticated as the Act requires, and Section 33 recognises for that purpose, where the principal lives in India, only a power executed before and authenticated by the Registrar or Sub-Registrar of the district where the principal resides. For a principal outside India, the power must be executed before and authenticated by a Notary Public, a court, judge or magistrate, or an Indian consul or vice-consul. A buyer dealing with a GPA holder should insist on a power that meets this standard, because it is the one the sub-registrar tests.

Anything outside the authority does not bind the owner. A GPA to manage does not permit a sale. A GPA to sell does not permit a gift or a mortgage unless it says so. Section 190 of the Contract Act bars an agent from employing another to perform acts he has undertaken to perform personally, unless the custom of trade or the nature of the agency allows it, so a chain of GPAs, each holder appointing the next, is a chain of questions about whether each link was authorised, and the answer to the first broken link decides all the ones after it.

What happens to a GPA when the seller dies or revokes it?

The GPA ends. Section 201 of the Indian Contract Act, 1872 lists the events that terminate an agency: the principal revoking the authority, the agent renouncing it, the business of the agency being completed, "either the principal or agent dying or becoming of unsound mind", or the principal being adjudicated insolvent. A power of attorney is an agency, so the seller's death extinguishes the holder's authority on that day. A sale deed signed by the holder after the principal's death is signed by nobody with authority to sign it. Section 209 adds only that the agent must then take reasonable steps to protect the interests entrusted to him on behalf of the principal's representatives, which is a duty of care, not a surviving power to sell.

The word "irrevocable" on the cover does not change that. Section 203 allows the principal to revoke at any time before the authority has been exercised so as to bind him, Section 207 says revocation may be express or implied from conduct, and Section 208 protects a third party only until the revocation becomes known to him. The one statutory exception is Section 202. Where the agent "has himself an interest in the property which 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 illustration to the section is an authority to sell land and pay the agent's own debts out of the proceeds, which neither revocation nor death ends. Whether a GPA buyer who has paid the price holds such an interest is argued in almost every dispute of this kind, and the buyer should expect to prove it from the documents rather than assume it. Even where the buyer succeeds, Suraj Lamp closes the door that matters most: an irrevocable power still does not transfer title, it at most keeps an agency alive.

The will in the package is weaker still. It takes effect only on death, the seller can revoke it or make a later one at any time, and it must then be proved as a will against the seller's heirs, who have every reason to contest it. Our guide on gift deed, will or settlement deed explains why a will is the least reliable of the three as a means of passing property to a chosen person.

Common mistake. Treating the words "irrevocable" and "coupled with interest" typed into a GPA as a guarantee that it survives the seller. Section 202 protects an agency only where the holder actually has an interest in the property, and even then the GPA remains an authority to sell, not a transfer of ownership.

Does Section 53A part performance protect a GPA buyer?

Only as a shield, only against the seller, and only if the agreement was registered. Section 53A of the Transfer of Property Act debars a transferor from enforcing any right against a transferee who has taken possession under a written contract for consideration and has performed or is willing to perform his side. Suraj Lamp quotes Rambhau Namdeo Gajre v Narayan Bapuji Dhotra for the limit: the protection "is a shield only against the transferor", it "has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed", and it "cannot be pressed in service against a third party". A GPA buyer in possession can therefore resist eviction by the seller. He cannot use Section 53A to sell, to mortgage, to stop the seller's creditor, or to defeat a later purchaser without notice, whom the proviso to the section expressly protects.

The registration condition is the part most GPA buyers do not know. The Registration and Other Related Laws (Amendment) Act, 2001, in force from 24 September 2001, inserted Section 17(1A) into the Registration Act: a document containing a contract to transfer immovable property for consideration, relied on for the purpose of Section 53A, "shall be registered", and if it is not registered it "shall have no effect for the purposes of the said section 53A". The same amendment deleted from the proviso to Section 49 the words that had allowed an unregistered document to prove part performance. An unregistered agreement to sell executed after that date gives the buyer no Section 53A defence at all. What survives is the other limb of the Section 49 proviso: the unregistered agreement "may be received as evidence of a contract in a suit for specific performance". The buyer can sue on it. He cannot hide behind it.

Deadline warning. Article 54 of the Limitation Act, 1963 gives three years for a suit for specific performance, running from the date fixed for performance or, where none is fixed, from the date the buyer has notice that performance is refused. A GPA buyer who sits on a refusal for three years loses the only route to a registered deed.

How much stamp duty does a GPA to sell attract in Karnataka?

The same duty as a sale deed, in the two cases that matter to a GPA buyer. Article 41 of the Schedule to the Karnataka Stamp Act, 1957 charges an ordinary power of attorney at fixed amounts, but clause (e), as substituted from 1 April 2009, charges a power "given for consideration or when coupled with interest and authorizing the attorney to sell any immovable property" with the same duty as a conveyance under Article 20(1), on the consideration or the market value of the property, whichever is higher. Clause (eb) reaches the same result from the other side: a power given to anyone other than the executant's father, mother, wife or husband, sons, daughters, brothers or sisters, authorising that person to sell immovable property in Karnataka, carries conveyance duty on the market value. Either clause catches the buyer-as-attorney GPA at the heart of a GPA sale, which is why the discount that made these deals attractive in the first place has largely gone in this State.

Two further provisions in the same Schedule matter. Explanation I to Article 5(e) provides that where an agreement of sale refers to a power of attorney granted separately by the seller to the purchaser for the same property, possession is deemed to have been delivered, so the agreement itself is charged as if possession passed. And a set-off runs both ways: duty paid on the GPA under clause (e) or (eb) is adjustable against the duty on an agreement for sale or an instrument of sale between the same parties for the same property, and duty paid on the agreement or sale is adjustable against the GPA. An instrument that is not duly stamped cannot be admitted in evidence, acted upon, registered or authenticated under Section 34 of the Act until the deficit is paid together with the penalty the proviso fixes at ten times the duty or the shortfall, and Section 33 obliges every public officer before whom it comes to impound it. Duty rates change and figures are deliberately not given here. The point is that a GPA to sell is not a cheap document in Karnataka, and an old GPA that was stamped as an ordinary power is a document a sub-registrar or a court may refuse to look at until it is regularised.

How do you convert a GPA purchase into a registered title?

By getting the registered sale deed the law required in the first place, from the person who still owns the property on the record, and by suing for it if that person will not sign. Suraj Lamp itself points the way. The SA/GPA/Will documents "can continue to be treated as existing agreement of sale", "nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title", and the documents "may also be used to obtain specific performance or to defend possession under section 53A". The steps in practice are these.

1. Establish who owns the property today. Pull the encumbrance certificate for the full period from the seller's own purchase, the current khata or RTC, and the seller's title deed. Our guide on viewing an encumbrance certificate online in Karnataka shows how. If the seller has since sold or mortgaged the property to someone else, that entry surfaces here and changes everything that follows.
2. If the seller is alive and cooperative, have the seller execute and register a sale deed in your favour now. The GPA is unnecessary for this and is better left out of it. Stamp duty is at the conveyance rate, with any duty already paid on the GPA or the agreement adjusted against it under the Karnataka Stamp Act provisos, and the registration fee is payable afresh.
3. If the seller is alive but out of reach, and the GPA is authenticated in the manner Section 33 of the Registration Act recognises and has not been revoked, a properly authorised attorney may execute the sale deed in the seller's name. Confirm with the sub-registrar in advance that the power will be accepted, and check the encumbrance certificate for any registered cancellation of it.
4. If the seller has died, the GPA died with him under Section 201 of the Contract Act. The sale deed must come from all of the legal heirs, each of whom must sign, and the will in your bundle helps only once it is proved. Our guide on whether one legal heir can sell jointly inherited property explains why a deed from one heir alone will not do.
5. If the seller or the heirs refuse, file a suit for specific performance of the agreement to sell within three years of the refusal. The unregistered agreement is admissible under the proviso to Section 49 of the Registration Act for this purpose. Plead and be ready to prove that you have performed and remain ready and willing to perform your side, which Section 16 of the Specific Relief Act, 1963 makes a condition of the relief, and seek interim protection of possession at the same time.
6. Only after the sale deed is registered, apply for khata transfer or mutation. Suraj Lamp forbids mutation on the GPA documents alone, though it also says that mutations already effected on them before the judgment need not be disturbed.

Indicative cost and time: stamp duty and registration fee on a fresh deed are the same as for any purchase at the current guidance value, and a contested specific performance suit in a Bangalore civil court commonly runs for several years before decree, with execution to follow if the seller still will not sign.

What should you check before paying for a property on GPA?

Start with why. In practice the reason a seller offers a GPA instead of a sale deed is the risk you are being asked to carry, and it is almost always one of three things: the seller's own title is not good enough to register a deed, the property is one where a registered conveyance is restricted or the khata will not move, or someone wants the price kept off the record. None of those improves with time, and none is cured by the buyer's good faith. The first question to ask is therefore not "is the GPA registered" but "why can this person not sell me this property the ordinary way", and if the answer is a shrug, the answer is no. On any GPA file that has already been paid for, the first document worth reading is the seller's own title deed, because a seller who could not convey then may still be the only person who can convey now, and the second is the encumbrance certificate for the years after the GPA, because the same seller may have sold again.

Common mistake. Accepting a "registered GPA" as proof of ownership. Registration of a power of attorney proves that the seller signed it on that date. It does not prove that the seller owned the property, that the power is still alive, or that the seller has not since sold to someone else.

Before any money moves, these are the checks that decide the file.

The rest of the due diligence is the same as for any purchase, and our verification checklist before buying a home runs through it. The difference on a GPA file is that the checklist is being run on the seller's title, not the holder's, because the holder has none. Where the seller cannot pass that checklist, the cure is not a better GPA. It is a registered sale deed from whoever can pass it, or a decision to walk away. Our property and real estate law practice covers both the title review and the suit when the deed is refused.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Title review, sale deed drafting and specific performance suits are handled by our property and real estate law practice.

• Sale Agreement vs Sale Deed: What Is the Difference?
• Know Your Rights in Property Disputes & Verification Checklist Before Buying a Home
• How to View an Encumbrance Certificate Online in Karnataka
• E-Khata in Bangalore: How to Get and Transfer Your Khata
• Gift Deed, Will or Settlement Deed: Which One Should You Use?
• Can One Legal Heir Sell Jointly Inherited Property?