Overview of Power of Attorney
A Power of attorney is a crucial necessary paper amongst various legally important necessary papers for giving authority to some person to do/manage a certain act, property, finances, business or medical affairs, etc on behalf of the real owner. There are two parties to an agreement of power of attorney. The person who makes a PoA and appoints another person to act on his/her behalf is called a principal/ donor/ grantor and the person to whom such authority is given is called an agent or a power of attorney holder.
It depends on the principal to give extensive or limited rights to the attorney holder with regard to decision-making of the work/responsibility given to him.
Types of Power of Attorney
The power of attorney is categorized into 4 types based on the level of responsibility being delegated to the holder. These are as follows:
Conventional Power of Attorney
A conventional power of attorney is called a general power of attorney or limited power of attorney. Under this, the power given to the attorney holder is limited to performing acts not prohibited by law and principal. It is given for a specified period of time. An attorney holder has the right to make personal and business decisions under this type.
For example: The principal can give a right to the agent for selling a plot owned by him on behalf of him when he is not in the city.
Durable Power of Attorney
Such a power of attorney is drawn in favour of an agent for the lifetime of a principal. Under this type, the agent has the authority to take decisions on behalf of the principal in cases the principal becomes incapable of taking such decisions on his own. A durable power of attorney comes to an end after the principal has died or the same has been cancelled by the principal himself.
For example: A principal can appoint an agent for managing his business finances.
Springing Power of Attorney
This type of power of attorney gives power to the agent to act on behalf of the principal for an event, time period or condition. The agent has the right to act on behalf of the principal when the principal losses his legal capacity to perform an act.
For example: If an armed personnel has a duty to protect the nation by living overseas for a specific time, he can appoint an agent for the purposes of managing his finances for such a period.
Medical Power of Attorney
This type of PoA comes under both a springing PoA and a durable PoA. A principal makes a medical power of attorney for healthcare purposes. Such a PoA comes into effect only after the principal becomes incapable due to unsound mind and body.
For example: An agent has the right to pay off the principal’s medical expenses.
A person eligible to become a Power of Attorney holder
It is very important for a principal to choose a trustworthy power of attorney holder for the desired purpose. Thus, a person to become a power of attorney holder has to be:
Even if a person qualifies for the above-stated criteria, it is important to consider other attributes of the person such as his character and values. The person who is being chosen as an agent must have good decision-making skills without spending much time.
The appointed agent should not mix his personal bank account details with the principal’s account details. The agent should not enter into agreements which might create a conflict of interest.
Can a principal appoint more than one agent?
Yes, a principal or a grantor has the right to appoint more than one power of attorney holder. The principal can define the powers of all the attorney holders with regard to joint and separate decision making authority.
If a person appoints multiple agents for a purpose, it will help him in making a good decision after considering all the perspectives of the agents. It helps in ascertaining the advantages and disadvantages while making a decision. However, the appointment of multiple agents might affect the decision-making negatively as the opinion of all the agents with regard to a specific topic might differ and cause delays in making a crucial decision.
Also, a prudent person might appoint multiple agents as a backup if any of the agents falls sick or is unable to perform his duties.
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Revocation of Power of Attorney
A power of attorney can be revoked or cancelled by the principal at any time as long as he/she is of sound mind and competent. It is the responsibility of the principal to inform the agent in writing about the revocation of PoA. The letter of revocation must be duly signed by the principal and such information of revocation must be given to all the interested parties who deal with the agent appointed on the principal’s behalf.
Points to remember while making a PoA necessary paper
There are certain points which should be kept in mind while making a power of attorney necessary paper for appoint of the agent. These are as follows:
Contents of a Power of Attorney
A sound and valid power of attorney should contain the following details:
Sample Format of a Power of Attorney
There is a sample format of a General power of attorney made by a principal for managing/selling his property through an appointed agent.
GENERAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT, I Mr. ABC S/o Mr. XYZ residing at Plot No.2, XY Colony, Mumbai do hereby appoint and authorize Mr. CVB S/o Mr. ACB residing at Plot No.10, XY Colony, Mumbai as my true and lawful General Attorney.
Whereas the principal has the absolute title and possession of property number 16 measuring 1000 square yards situated in BHY Colony, Mumbai. The same has been stated in the sale deed No. 12321. The said property is herein referred to as the “property”.
Whereas I am not able to manage and look after the property on my own, so I hereby authorize my appointed agent to do the following actions regarding the property on my behalf:
- To manage the property on my behalf and represent me before the respective authority concerning the property.
- To contact any government authority for the transfer of the property in name of another person and to provide the physical possession of the said property.
- To oblige with any taxes or dues pending in respect of the said property on my behalf.
- To enter into an agreement concerning the sale of the property with the potential buyer and to receive earnest money on my behalf.
- To execute the sale and get it registered before the competent authority by receiving full payment in his name or my name.
- To perform all other required tasks, deeds and other things not mentioned in the deed and are related to the property. The act performed will be considered as performed by me if I was present.
IN WITNESS WHEREOF, THIS GENERAL POWER OF ATTORNEY HAS BEEN SIGNED BY ME IN MUMBAI ON 6TH DAY OF MARCH OF 2021 IN THE PRESENCE OF THE FOLLOWING WITNESSES WHO HAVE ALSO SIGNED BELOW :
Signature of the Executant
Stamp Duty for Power of Attorney
The law defines a definite amount as a stamp duty to be paid for the registration of a power of attorney if a principal executes a general power of attorney (GPA) in name of his/her family members such as father, mother, son, daughter, wife, husband, brother, sister or any close family relative, etc.
If a principal appoints an agent by executing a general power of attorney (GPA) where such an agent is not his close relative and performs the acts stated in the power of attorney necessary paper for some consideration in exchange, then the stamp duty is calculated considering the market value of the property which is the subject matter or a consideration value, whichever is higher.
How can an NRI execute a Power of Attorney (PoA)?
If a Non-Resident Indian is willing to purchase or sell a property located in India, he/she can appoint an agent by executing a Power of Attorney. The agent can be appointed for purchasing or selling the property on behalf of the NRI.
Power of Attorney - Dos and Don'ts as an agent
There are certain dos and don’ts that a power of attorney holder should follow. The list of such acts has been defined below:
Financial and Property matters:
A PoA holder can-
A PoA holder is not allowed to-
Health and Welfare
A PoA holder can-
A PoA holder can’t do-
Frequently Asked Questions
Yes. There are certain risks involved while appointing an agent for certain tasks. If the agent has been appointed to manage the finances, he might have access to a lot of personal details and it is important to appoint an agent who is trustworthy. If the appointed agent is not trustworthy, it might create a lot of problems for the principal.
For example: If the agent appointed for the purposes of managing finances runs away with the principal’s money, it would be difficult to trace back the agent and bring back all the money.
Also, as per a legal principle, a principal is responsible for all the acts done by his agent during the course of employment. Thus, if the agent enters into an agreement with a third party on your behalf, it is mandatory for you to oblige with the terms of the agreement whether you wish to do it or not.
Therefore, it is important for the principal to appoint an agent wisely.