Why Is General Power Of Attorney Registered?
- Special Power of Attorney(SPA)
- General Power of Attorney(GPA).
while an SPA is used for transfer of a specific right to the person on whom it is conferred, the GPA authorizes the holder to do whatever is necessary. For example, in property sales using this instrument, the buyer gets a GPA from the seller not only for his own use of the property, but for the further sale to someone else if he so desires. Of course, a GPA can only sell the property through another GPA.
Why is this used in property transactions?
Many properties cannot technically be sold for a variety of reasons. For instance, the original owner may have got it from an institution like DDA at a below-market rate and DDA may have imposed a minimum period for which it must be held. Any sale before this period is not legally possible, so the GPA may be resorted to Or, the property could be part of a housing society which has got the land on lease. In such cases, the owner of the property actually has only a certificate from the society allowing him to use it, but not to sell it. It is only when the property is converted from lease-hold to free-hold that he gets the title to the property. This is when he actually becomes the owner and hence is entitled to sell it.
How is the GPA used in such cases?
The person wanting to sell grants a GPA to the buyer. Typically the buyer will insist that the GPA must be irrevocable, since he wants to ensure that the seller does not renege on the deal after the money has been paid, he will also insist on a will and perhaps even on all legal heirs of the seller submitting affidavits revoking their claim to the property. the GPA also specifies that he has the right to sell the property when it is saleable on transfer it to anybody else at this discretion, typically the right to get the property converted to free-hold is also specified in the GPA.
Why does a GPA have to be registered?
The government realized properties were being bought and sold through GPAs and no stamp duty was being paid on these transactions. To stop this and boost its revenues, in 2004 the Delhi government made it mandatory for GPAs to be registered at 90% of stamp duty rate applicable to sale deeds, it made it clear that GPAs that are not registered will have no legal validity.
What has the Supreme Court done?
In October, SC ordered that no further transfer of property should be allowed through GPAs. Most stated banned to use of GPAs for this purpose soon thereafter, But the Delhi government passed an order to this effect only last week
What effect will this have?
For the future it means properties that cannot legally be sold will become truly immoveable, As for the past transactions for properties in Delhi for which GPAs have been conferred since October 11,2011 become null and void for legal purposes.
If someone has bought a property on a GPA which has been registered prior to October 2011 and now wants to sellit, can he sell it?
A sale will be possible only if the property has been converted to free hold and title for the property obtained. The GPA on its own will not suffice. If the conversion to freehold hasn't been done but is allowed, the GPA can be used to do the conversion.
Will Property prices go up or down?
Properties whcih are freehold and to which title is clear become more expensive as the supply of saleable properties will come down since those held on GPA cannot be sold.
Source : Economic Times
How is the GPA used in such cases?
The person wanting to sell grants a GPA to the buyer. Typically the buyer will insist that the GPA must be irrevocable, since he wants to ensure that the seller does not renege on the deal after the money has been paid, he will also insist on a will and perhaps even on all legal heirs of the seller submitting affidavits revoking their claim to the property. the GPA also specifies that he has the right to sell the property when it is saleable on transfer it to anybody else at this discretion, typically the right to get the property converted to free-hold is also specified in the GPA.
Why does a GPA have to be registered?
The government realized properties were being bought and sold through GPAs and no stamp duty was being paid on these transactions. To stop this and boost its revenues, in 2004 the Delhi government made it mandatory for GPAs to be registered at 90% of stamp duty rate applicable to sale deeds, it made it clear that GPAs that are not registered will have no legal validity.
What has the Supreme Court done?
In October, SC ordered that no further transfer of property should be allowed through GPAs. Most stated banned to use of GPAs for this purpose soon thereafter, But the Delhi government passed an order to this effect only last week
What effect will this have?
For the future it means properties that cannot legally be sold will become truly immoveable, As for the past transactions for properties in Delhi for which GPAs have been conferred since October 11,2011 become null and void for legal purposes.
If someone has bought a property on a GPA which has been registered prior to October 2011 and now wants to sellit, can he sell it?
A sale will be possible only if the property has been converted to free hold and title for the property obtained. The GPA on its own will not suffice. If the conversion to freehold hasn't been done but is allowed, the GPA can be used to do the conversion.
Will Property prices go up or down?
Properties whcih are freehold and to which title is clear become more expensive as the supply of saleable properties will come down since those held on GPA cannot be sold.
Source : Economic Times
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