Table of Contents
What is a Power of attorney?
A power of attorney (POA) is a legal document that authorizes one person to act on behalf of another (the agent or attorney-in-fact) (the principal). Now the question is that should power of attorney be registered or not? The answer is not as straight as the question. Let’s have a broader look at the process and then decide. The agent can make legal decisions about the principal’s property, finances, or medical care with extensive or limited legal authority. In the event of a principal’s illness or infirmity, or when the principal is unable to act on his or her own, a power of attorney is frequently employed.
When it is useful to make a Power of Attorney?
Signing contracts, buying and selling stocks and bonds, paying bills, managing real estate, and just about any other task that individual desires to assign to an agent can all be done with a power of attorney.
Below are the few reasons a Power of Attorney can be made-
- You are old and want to appoint a representative for yourself
- When you just want to appoint a representative for managing your assets. For example- If you stay in a foreign country and want someone to make decisions on your behalf or manage your bank accounts and other assets in your home town you can have a power of attorney.
- You are old and want to appoint someone to manage some or all of your financial affairs
- You are seriously ill
- You do not get sufficient time to manage the certain activities you want someone else to do.
When Registration of Power of Attorney is Necessary?
Registration is compulsory in case POA is given for the following reasons –
- Selling or buying a property,
- Signing various documents related to a house loan,
- Taking possession of the property from a builder,
- Making admission of execution of a document before the sub-registrar where property transfer is involved.
When Registration of Power of Attorney is Optional?
Registration is not compulsory if POA is given for the following reasons –
- Executing the Leave and License Agreement,
- Signing documents related to society,
- Handling court matters eg. filing a case, appointing a lawyer, defending POA grantor, signing necessary documents, etc.
How To Make A Power Of Attorney Legally Valid?
Anyone over the age of 18 who is of sound mind can appoint an Attorney. A minor cannot be appointed as the holder of a lawyer’s power of attorney.
A power of attorney must be signed by both the principal and the attorney, as well as two witnesses, in order to be legally legitimate. The deed then is signed on Stamp Paper of the appropriate value for the jurisdiction in which it is made.
Unless the power of attorney document includes the transferring of property rights/titles, etc., it is not required to register it.
Both parties to a power of attorney deed should be informed and responsibilities under the document and proceed appropriately. The principal must ratify, or agree to, the acts of the attorney performed in the course of his or her responsibilities as an attorney.
Should power of attorney be registered?
All powers of attorney are not need to be registered. Only in certain states is the deed of power of attorney required to be registered if the power of attorney relates to the transfer of immovable property possession of which has been or will be handed over to the attorney holder, or if an irrevocable power of attorney relating to the transfer of immovable property is made.
All other powers of attorney are optional to register. A registered document, on the other hand, is presumed to have been properly executed. As a result, it is the responsibility of the party to challenge the transaction’s authenticity to demonstrate that the transaction was invalid.
As a result, it is always possible to register a power of attorney to avoid any potential attack that it was not properly executed.
Payment of Stamp Duty
The ‘Indian Stamp Act, 1899′ charges a Power of Attorney under section 48 of Schedule I. The Stamp Act, as it applies in different states, specifies the stamp duty that must be paid on various types of power of attorney. Failure to pay the required stamp duty may result in the following consequences:
- Any authority capable of receiving evidence or any public authority would find the power of attorney inadmissible in evidence.
- The document might also be impounded to ensure that the full stamp value is paid.
- Only if a penalty stamp duty of ten times the original amount is paid can an unstamped or under-stamped power of attorney be entered in evidence.
Conclusion
To summarise, while notarization and registration of powers of attorney are not required in all situations, it is preferable to have them notarized in order to effectively confront any challenge to their proper implementation. Significant rights derived under/through power of attorney may be registered.