Although the use of power of
attorney is widespread in crucial transactions concerning immovable property,
many remain unaware of the legal intricacies involved that contribute to the validity
of these transactions. Through a power of attorney, the grantor (executant)
essentially authorizes the grantee (attorney) to do the acts in relation to the
immovable property that are specified in the power of attorney, on behalf of
the grantor: When validly executed, such acts will be binding on the grantor as
if they were carried out or done by himself.
Owners may execute a
general/special PoA (GPA/SPA) for varied purposes (for instance, obtaining a
loan on behalf of the executant owner; negotiating or finalizing terms and
conditions of sale/lease; managing or renovating the property, etc.). Here, the
attorney may use general/special PoA for such specific and limited purpose
only. A power of attorney holder for an immovable property is merely an agent
of the owner of the property and can do only those acts for which he has been
authorized under the PoA by the owner. Any act by the attorney which goes
beyond the scope of his powers and responsibilities set out in in the PoA, or
any act which he undertakes for his own benefit, would be unlawful and amount
to breach of trust and liable to challenge in the courts of law.
No title transfer
A PoA is not an instrument of
transfer in regard to any right, title or interest in an immovable property.
Title of ownership in a
property does not stand transferred in favour of an attorney simply by virtue
of GPA/SPA – either by itself or in combination with other legal instruments.
Valid title or ownership in immovable property can only be transferred by a
sale deed/conveyance deed/gift deed or other recognized transfer document that
is duly stamped and registered. An attorney holder may execute a sale deed in
exercise of the specific power granted to him under the PoA and convey title in
immovable property on behalf of the owner, subject to the limitations contained
in the PoA. For instance, if an owner is unable to be present at the time of
execution of sale deed, he/she may validly execute a PoA in favour of a family
member for completion of the sale transaction on his behalf. Here, both the
buyer as well as owner should ensure that the PoA is validly subsisting and in
force at the time of execution of transfer documents and has been duly
registered.
Revoking a PoA
Except in cases where PoA is
coupled with interest/consideration, it is revocable in nature. It is settled
law that where a PoA is executed in favour of another in lieu of valuable
consideration, the authority granted to the attorney cannot be revoked at the
mere will of the grantor. However, a GPA/SPA without consideration may be
validly revoked by means of a cancellation deed. Once revoked, an attorney
cannot act on the basis of such revoked instrument. In order for the revocation
of GPA to be validly effected and to prevent any fraudulent transactions, it is
important that the cancellation deed is duly executed and registered.
