Risks of Buying Property Through Power of Attorney (GPA) in India

Author: Advocate Harshit Sachar
Place of Practice: Ludhiana, Punjab
Jurisdiction: India

Buying property solely through a General Power of Attorney (GPA) does not legally transfer ownership in India. The Supreme Court has clarified that GPA transactions do not create valid title. Purchasing property through Power of Attorney carries significant legal risks, including invalid ownership, litigation, and financial loss.

What Is a Power of Attorney in Property Transactions?

A Power of Attorney (POA) is a legal document authorizing one person (agent) to act on behalf of another (principal).

In property matters, POA is commonly used for:

• Execution of sale deeds

• Managing property

• Representing NRI owners

• Handling documentation

However, POA is not a sale deed.

Supreme Court Position on GPA Sales

In the landmark case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, the Supreme Court held that:

• Transfer of property through GPA alone does not convey ownership.

• Only a registered sale deed legally transfers title.

• GPA transactions cannot substitute valid conveyance.

This judgment significantly reduced misuse of GPA sales.

Major Risks of Buying Property Through Power of Attorney

1️⃣ No Legal Ownership Transfer

A GPA holder can execute documents on behalf of the owner, but:

• Ownership remains with the principal.

• Buyer does not get legal title without registered sale deed.

• Future disputes are likely.

2️⃣ Revocation of Power of Attorney

The principal can revoke a GPA at any time unless it is irrevocable and coupled with interest.

If revoked:

• The buyer’s transaction may become invalid.

• Litigation may arise.

3️⃣ Death of Principal

Power of Attorney automatically terminates upon:

• Death of principal

• Mental incapacity

Any transaction executed afterward may be invalid.

4️⃣ Fraud and Multiple Sales

In fraudulent cases:

• Same property is sold to multiple buyers.

• Fake POA documents are created.

• Signatures are forged.

Buyers often discover fraud only after possession disputes.

5️⃣ Loan & Mortgage Problems

Banks generally refuse loans on GPA properties because:

• Title is considered defective.

• Marketability is compromised.

This reduces resale value significantly.

6️⃣ Litigation Risk

GPA-based purchases often result in:

• Ownership disputes

• Legal heir claims

• Cancellation suits

• Criminal complaints

Litigation cost may exceed property value.

When Is Power of Attorney Legitimate?

POA is legally valid when:

• Used to execute a registered sale deed on behalf of the owner.

• Properly stamped and registered.

• Used as authority, not as substitute for ownership transfer.

GPA should support a sale deed, not replace it.

How to Protect Yourself

If dealing with a POA transaction:

✔ Verify registered POA document
✔ Confirm it is not revoked
✔ Check principal’s identity and status
✔ Ensure sale deed is executed in your favour
✔ Conduct full title verification

Never rely solely on GPA for ownership.

FAQs

Is GPA sale legal in India?
No. GPA alone does not transfer ownership.

Can GPA property be registered later?
Only through proper sale deed executed by lawful owner or authorized agent.

Can banks finance GPA property?
Most banks avoid financing GPA-only transactions.

Is Special Power of Attorney safer?
It is more specific, but still requires proper sale deed for ownership transfer.

Final Legal Insight

Purchasing property through Power of Attorney without a registered sale deed exposes buyers to serious legal and financial risks. Clear title and proper registration remain the foundation of secure property ownership. Due diligence before purchase is essential to prevent future disputes.

Disclaimer

This article is for general informational purposes only and does not constitute legal advice. Property transactions vary based on specific facts and documentation. Readers are advised to obtain professional legal verification before entering into any Power of Attorney-based transaction.