Buying Property Through a Power of Attorney: Risks and Safeguards

A power of attorney is a legal document in which one person — the principal, here the property owner — authorises another person — the agent, or attorney holder — to act on their behalf.

The key point for a buyer: a power of attorney does not make the agent the owner. It is a delegation of authority, not a transfer of property. The agent can sign a sale deed in the owner's name only if, and only to the extent that, the POA authorises it — and only while the POA remains valid.

That is why a careful buyer always asks the same questions:

• Is the document genuine?
• Does it actually authorise the sale of this particular property, including signing the sale deed and receiving the money?
• Is it still in force today?
• Was it executed and registered, or authenticated, in the manner required?

If the answer to any of these is no, or uncertain, the sale may be open to challenge however good the rest of the paperwork looks. A sale deed signed by an agent whose authority had ended, or never existed, can leave the buyer without a good title — and the real owner, or their heirs, can come forward years later.

Powers of attorney come in two broad types.

A general power of attorney (GPA) gives the agent wide powers to act for the principal across many matters — managing property, dealing with tenants, paying taxes, representing them in government offices and sometimes selling.

A special power of attorney (SPA), also called a specific power of attorney, authorises the agent to do a particular act or set of acts — for example, to sell a named site, sign the sale deed, present it for registration and receive the sale price.

For a property sale, a specific, clearly worded document is generally safer for everyone. It shows the owner has chosen this sale of this property, rather than handing over open-ended authority years ago. When you read any POA, look for:

• A precise description of the property, matching the title deed.
• An express power to sell, to sign and present the sale deed for registration, and to receive the price.
• The date and place of execution, and details of registration or authentication.
• Signatures, photographs and identity details of both principal and agent.

A general power of attorney that merely allows the agent to manage the property, for instance, may not be enough to sell it. Your lawyer should read the actual wording, not just the title at the top of the document.

There are many honest reasons an owner sells through someone else:

• NRI owners. An owner living abroad may not be able to travel for every step of a sale. Our guide for NRIs buying property in Mysuru looks at the same tool from the buyer's side.
• Elderly or unwell owners. An owner who finds it hard to visit offices may authorise a son, daughter or trusted relative to handle the sale.
• Co-owners. Where several family members own a property together, the others may authorise one of them to act for all.

In genuine cases like these, the agent has nothing to hide, and should be happy for you to verify the POA and speak to the owner.

A POA signed outside India usually has to go through additional formalities, such as authentication, before it can be used here, and there are rules — including time limits — for stamping it once it arrives in India. These requirements are set by law and can change. If the owner is abroad, ask your lawyer exactly what the document should look like, and check it against that before you rely on it.

Because the agent is not the owner, a POA sale carries risks that an ordinary sale does not:

• The POA has been revoked. An owner can generally cancel a power of attorney. If they have, the agent no longer has authority, even if they still hold the original document.
• The owner has died. A power of attorney generally comes to an end when the principal dies. After that, the agent cannot sell; the property passes to the owner's heirs. An agent who conceals a death and goes ahead leaves the buyer exposed to the heirs' claims.
• The POA is forged. Forged or tampered powers of attorney are a known feature of property fraud. The owner may never have signed it.
• The POA was not properly executed. A document that was not registered or authenticated as required, or not properly stamped, may not be accepted at registration and may not stand up if challenged.
• The POA does not cover this sale. It may relate to a different property, may not include a power to sell, or may limit the price or purpose.
• The money goes astray. Even with a valid POA, if the price is paid to the agent and never reaches the owner, disputes follow.

This is why your lawyer will want to see far more than a photocopy. Our guide to property scams in Mysuru covers other warning signs worth knowing.

For years, a practice grew up in some places of "selling" property without a sale deed. Instead, the buyer received a bundle of documents: a sale agreement, a general power of attorney from the owner authorising the buyer to deal with the property, and a will leaving the property to the buyer. This was called an SA/GPA/Will transaction, or simply a GPA sale, and it sidestepped the stamp duty and registration of a proper sale.

In Suraj Lamps & Industries v. State of Haryana (2011), the Supreme Court of India held that such SA/GPA/Will transactions do not transfer title to immovable property. Only a registered sale deed does. A power of attorney authorises someone to act; a sale agreement is a promise to sell; a will speaks only after death and can be changed before then. None of them, alone or together, conveys ownership.

What this means for you:

• If you are offered a property on the strength of a GPA, an agreement and a will rather than a registered sale deed in your favour, you are not buying ownership.
• If the seller's own title rests on such a bundle — they "bought" the property through a GPA sale years ago — their title is defective, and a lawyer must advise whether and how it can be put right before you buy.

What the ruling targets is using POA papers as a substitute for a sale deed. It does not stop a genuine owner from appointing a trusted person to sign and register a sale deed on their behalf. In a proper POA sale, you still receive a registered sale deed — the agent simply signs it for the owner.

If the seller is acting through a power of attorney, these steps protect you:

1. See the original. Examine the original POA, not a copy, and note its registration or authentication details.
2. Get a certified copy. Where the POA was registered, your lawyer can obtain a certified copy from the sub-registrar office and compare it with the one you were shown.
3. Check the wording. It should be specific to this property and expressly allow sale, signing and registration of the sale deed, and receipt of the price.
4. Speak to the owner directly. Confirm with the owner — in person, or by video call if they are abroad — that they are alive, want to sell to you, and have not revoked the POA.
5. Check the owner's title as usual. A valid POA does not cure a defective title. The owner's deeds, Encumbrance Certificate and khata need the same checks as in any purchase.
6. Pay the owner. Wherever possible, pay the price into the owner's own bank account, not the agent's, and record it in the deed.
7. Insist on a registered sale deed. The purchase must end in a sale deed registered in your name, signed by the agent on the owner's behalf. Our guide to sale agreements and sale deeds explains why nothing less will do.

If the agent resists any of these steps — especially speaking to the owner — stop.

If you would like help checking a POA sale in Mysuru, Siddaganga Real Estate has spent over twelve years helping buyers with document verification, and you can contact our team to talk it through. A property lawyer should examine the POA itself before you pay anything.