Non-resident Indians (NRIs) often find it difficult to be physically present in India to carry out certain commitments or attend to some legal matters. In such cases, they can use a Power of Attorney (PoA), which is a legal document allowing another reliable individual to fulfill their legal responsibilities related to business, financial, or any other matters in India.
This legal instrument is vital for NRIs involved in property transactions and financial affairs in India. Whether it concerns the purchase or sale of a property, an NRI Power of Attorney is vital. There are various types of POAs, ranging from general to specific. Let us see each of them in detail.
Legal Framework Governing POA in India
The Indian Contract Act of 1872 and the Power of Attorney Act of 1882, which specify the formation and operation of POAs, make up the legal framework that governs POAs in India. These laws guarantee clarity and legality in authority delegation by establishing regulations for the legitimacy, eligibility, and enforcement of POAs in conjunction with the Indian Evidence Act of 1872.
Types of Power of Attorney
Power of Attorney (PoA) in India is introduced from the Indian Contract Act of 1872 and the Powers of Attorney Act of 1882. Following are the five types of NRI Power of Attorney:
- General Power of Attorney: GPA provides an extensive range of powers to the chosen agent or attorney, enabling the individual to handle diverse financial obligations and property-related legal matters on behalf of the NRI. This may include authority to sell property, pay bills, and make different business decisions.
- Special Power of Attorney: Contrary to GPA, a Special Power of Attorney offers limited power to the agent based on some special circumstances. This means the agent is appointed to handle specific tasks, like selling a particular property or dealing with specified documents.
- Durable Power of Attorney: This legal document allows the principal to appoint another person (the attorney or agent) to make financial and legitimate decisions on their behalf, including matters related to their credits or loans. It remains valid for an indefinite time unless cancelled by a court of law.
- Medical Power of Attorney: In a Medical Power of Attorney, the agent has the authority to exercise certain control over the principal’s healthcare decisions on their behalf. This mainly takes effect with the doctor’s (principal) consent and allows the agent to make all medical decisions.
Choosing the suitable type of NRI Power of Attorney depends on the NRI’s needs and the specific tasks they wish to hand over to the agent.
Step-By-Step Guide on Drafting a Power of Attorney
Mentioned below is the simple step-by-step process for drafting a Power of Attorney for an NRI:
Step 1: Determining the Scope of Authority
Outline the attorney’s responsibilities before drafting the Power of Attorney document. This includes signing documents, negotiating prices, and transferring property ownership.
Step 2: Consulting Legal Experts
Get assistance from legal professionals who focus on property laws in India and transactions with NRIs. They can give you valuable insights into legal requirements and help you draft a proper POA document that conforms to Indian laws.
Step 3: Drafting the POA Document
Work with the legal specialists to draft a well-versed POA document that reflects the powers entrusted to the attorney. Provide details like the attorney’s attorney’s responsibilities, the address of the property, the duration of authority, and so on.
Step 4: Implementing the POA
As soon as the POA document has been drafted, it needs to be implemented according to Indian legal procedures. This means signing the paper in front of a witness and getting it notarised, thus certifying its authenticity.
Step 5: Registering the POA (Optional)
Even though it is not compulsory to register a Power of Attorney (POA) for property sales, doing so can offer an additional level of protection and authenticity. Registering the POA at the Sub-Registrar’s office becomes enforceable and protects the interests of NRIs if any dispute arises.
Step 6: Transmitting the POA to India
After completion, safely transmit the POA document to India via a trusted channel. Ensure the attorney you have appointed in India gets the genuine POA document and the instructions that help them carry out the property sale process seamlessly.
Step 7: Monitoring the Property Sale Process:
Stay in touch with the attorney and communicate regularly to stay informed about the progress of the property sale and other commitments. Give necessary guidance and instructions whenever required to streamline a successful sale.
Choosing an Agent
If you wish to have your representative as the agent for POA, make sure he/she meets the following parameters:
- Minimum 18 years of age
- Reliable and trustworthy
- Should have a sound mental state and good character
The following are the rights and responsibilities of an agent:
Rights
- The agent given the POA will have the right to sue on behalf of his/her Principal.
- Section 219 allows the agent to get a mutually agreed sum as remuneration for providing the principal with the needed services. The law also entitles the agent to receive such remuneration upon completion of the work.
- The agent owns the legal right to sign documents and collect income on the principal’s behalf.
- Legal sections 222/223 provide an agent with the underwritten right by the principal to incur all relevant expenses and charges in continuation of the POA.
- The agent has the authority to open a bank account, issue checks, sell the property, and perform all duties in the best interest of his/her principal.
Responsibilities
A principal is allowed to take legal action against the agent for breaching the following duties as stated below:
- Section 212 requires the agent to work with the required skills and knowledge that the profession of agents demands by law.
- According to section 211, an agent is liable to act within the scope of authority conferred by the principal and mutually agreed upon. However, where the principal does not provide instructions, the agent must adhere to the customary practices prevalent in equivalent situations where he conducts the job.
- An agent must disclose relevant information within his knowledge to the principal, likely influencing the principal’s decision-making process.
- Section 215 obligates the agent not to compete with the principal or should not do anything for his own benefit, causing a conflict of interest.
- As per section 213, an agent must not disclose any confidential or personal information of his principal.
- The agent must disclose any extra profit he makes in the property deal of his principal and should not keep it concealed.
How to Use NRI Power of Attorney from Abroad?
Being a NRI, if you are wondering whether it is possible to execute POA from abroad, the answer is yes, it is possible. Simply follow the steps below for seamless execution of execution of POA from your country:
- Draft POA: Hire a legal practitioner and get a draft of the POA prepared according to your specific need.
- Notarisation: Meet a Notary Public from your country to get the POA notarised.
- Embassy Attestation: Get the notarised POA attested by the Indian Embassy/Consulate in your country.
- Sending and Registration: Send the attested POA to your attorney in India. They will register it at the Sub-Registrar’s office.
Make sure to follow the steps above with due diligence to execute your NRI POA from abroad seamlessly.
Revoking a Power of Attorney
Revoking a Power of Attorney in India can be tricky for NRCIs because of distance and jurisdictional problems. NRIs can adopt similar procedures as residents, like providing a written document to cancel the Power of Attorney.
However, it is essential to maintain proper communication and conform to specific legal requirements, which may involve the legalisation of documents when executed outside India.
Following are the situations in which revoking the NRI POA is required:
- In the event the principal party dies
- If there is proof of misuse of power or violation of the agreement by the agent
- If any one party wants to reject their powers according to the POA
- In the event, the principal party becomes insane or insolvent
Legal Pitfalls in NRI Power of Attorney and How to Avoid Them
Legal pitfalls in NRI POA arrangements can appear due to various factors, including disputes in legal systems, fraudulent activities, and misunderstandings. Following are some common pitfalls and ways to avoid them:
- Unrestricted POA Authority: Granting unlimited authority to the agent of NRI Power of Attorney can often lead to misuse of power, resulting in various problems. To avoid this, you, being the NRI, need to specify the powers granted to the agent and the necessary restrictions.
- Revocation and Termination: Lack of transparency regarding the revocation process can cause disputes. Under such circumstances, the conditions of revocation or termination are recommended to be specified in the POA documents.
- POA Execution Formalities: Failure to conform to the legal formalities during Power of Attorney execution can make it invalid. Hence, it is always recommended that the legal requirements of NRI POA be followed.
- Fraud and Misrepresentation: Risks of misrepresentation or scams by the agent of the NRI POA are common, especially in the absence of the principal. So, conducting detailed research and giving the POA to a reliable family member or an authorised person is highly recommended.
Conclusion
NRI Power of Attorney (POA) is one of the most crucial instruments for NRIs to handle their affairs and commitments in India efficiently. Understanding the rudiments of POA and picking the right type is essential to ensure seamless operations from overseas. You may also opt for legal advisors who can help you gain the benefits of POA successfully.
Though Power of Attorney helps to simplify the legal formalities necessary for NRIs to comply, various other legal affairs complicate the matter of property purchase. However, our services at Rustomjee help NRIs effortlessly invest in the Indian real estate market. Explore our NRI-specific services today!
FAQs
- How long does the NRI Power of Attorney remain valid in India?
The validity of Non-resident Indians’ (NRIs) Power of Attorney remains for the entire lifetime if not explicitly cancelled by the principal or through the operation of law.
- Is a lawyer needed to draft a NRI Power of Attorney?
A lawyer is not necessarily required to make an NRI Power of Attorney. You can easily do it while sitting in your home. However, seeking advice from a lawyer can speed up the process.
- Can more than one agent be chosen for Power of Attorney?
Yes, you can appoint many agents for the NRI Power of Attorney. All you have to do is appoint a reliable group of individuals over 18 years of age with sound mental health and capabilities.
For further information, visit our FAQs section.
