Sale of property through GPA, illegal: prices may hit

Source:Goodreturns:Monday, October 17, 2011, 10:30

The verdict of Supreme Court against the property sale through a general power of attorney (GPA) may affect the prices of properties issued via GPA as the apex court had declared this title as illegal.

A 'power of attorney' is a document whereby one person gives another person the authority to act on his or her behalf as his legal representative, along with the power to sell a property.

The sale of property through a GPA will give buyer the possession of property but will not transfer the ownership of title to the buyer, the court said.

The court also said, that the sale of property will be considered as legal only through a registered deed and not through a GPA. The deed needs to be duly stamped and registered by the local magistrate so as to make it lawfully transferred.

“In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred,” the court said.

The court's decision will be applicable on all future deals and also the deals happened in the past.

Though the court has come out with certain exceptions i.e. the transaction through GPA will be considered as legal only in the case where a person is giving a power of attorney to his spouse, son, daughter, brother, sister or any relative.

The move will prevent tax evasions and the flow of black money into the real estate market.

The court's decision may save the new buyers but would impact on the transactions in the secondary and resale markets as the prices of properties with GPA title may hit further.