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What You Need to Know About Power of Attorney When Making Real Estate Transactions in India

What You Need to Know About Power of Attorney When Making Real Estate Transactions in India

Time to time we need to give power of attorney (PoA) to a sibling or someone close to us in India to take care of litigation, real estate or any legal matter. It is also very important as a NRI/POI to have pertinent information about real estate law and how to bequeath properties in India to our U.S. Citizen children. Moreover, if a NRI/POI wants to buy a property in India they need to have a thorough understanding of recent changes in Indian real estate laws.

Real Estate Industry Status: The Real Estate Industry is one of the largest industries in India which contributes 6.5-7% to the GDP of India. The industry as an employer is the second largest industry after agriculture and over the next decade the probable growth would be 20%. The consistent growth of this industry was caused by high demand for office spaces in the corporate sector and urban and semi urban accommodations. The industry ranks 3rd among the 14th primary sector which makes direct, indirect and/or induced effect in the economy of India which provides a shining path for the NRIs to invest in the Industry.

Pre-RERA Period: Parallel to the growth, the same industry was unregulated and was inclined towards the builders and developers ‚ÄĒ from getting delayed possession to bearing loss of project cancelation everything was on the shoulders of the consumer. Even after living in a building for 10-13 years they could get evicted as their builder did not get the required approval from the appropriate authority.

Aftermath of RERA: The Real Estate Regulations and Development Act, 2016 came into effect on 1st May 2017. The core objective of this act was to provide transparency, citizen centricity, accountability, and most importantly financial discipline to the real estate sector.

Pre-RERA & Post-RERA:¬†In the pre‚ÄďRERA period the builders adopted a lot of malpractices and there were many loopholes such as, delay in project completion,¬†special offer on project booking,¬†cheating buyers with false information, and¬†getting away with all the wrong doings etc.¬†¬†The Post- RERA period brought a lot of changes which are as follows-

Registration: It’s mandatory for all the builders and developers to register their projects, be it commercial or residential, under this act if the land concerning the property is more than 500 sq ft and/or if a building has more than 8 apartments.

Now, unlike the pre-RERA period, the developers have to submit the sanction plan layouts, location of the project with demarcation of the carpet area i.e. within the four walls area, number of apartments and garage area etc.

  • Quality Updates:¬†Now, the developers have to post update regarding slightest alterations, status of the required pending government approvals, number and types of units sold of the projects, and even in case of any litigation the builders are entitled to upload all the relevant documents to the RERA website of the concerned state, which will make quite easy for the buyers to keep a tab on the progress of the property they are interested in.
  • Escrow Account:¬†Unlike before the builders/developers cannot misappropriate the fund received from the customers as they are bound to transfer 70% to an escrow account which will ensure that the builder cannot use or transfer the amount to any other project.
  • Sale Agreement Standardization:¬†During the pre-RERA period there was no standard format of sale deed as a result of which in case of any default the buyers were penalized and the builders were not even entitled to any such penalty, but post this act a particular format providing all the information such as the date of possession, specifications regarding external and internal development works etc., which protects the buyers and entitles the developers.¬†
  • Advance Payment:¬†The promoter cannot take more than 10% of the total cost of the project as an advance from the buyer.
  • Defect Liability Period:¬†The developers are now liable for 5 years even after handing over the possession, in case of any rectification and will compensate in case of any structural defect or poor quality of project contradictory to what promised.
  • Carpet Area:¬†The pre RERA period allowed the builders to sell the properties based on super built up area or built up area or carpet area and no matter for what area the buyer paid there was no surety what kind of area the buyer actually received.
  • False Information:¬†In case the buyers have given the advance payment based on some false information in the brochure of the advertisement of the project then the buyer can ask for a total refund of the paid amount or if the buyer chooses to stick with the project then a penalty has to be paid by the developer to the buyer which exceed up to 55¬†¬†of the cost of the project.
  • False Information:¬†If the promoter fails to complete or is unable to give possession on time then, the promoter is liable to pay the entire amount given by you if you wish to leave the agreement. But, if you wish to stay in the agreement then the promoter will have to pay interest for every month of the delay till you receive the possession.
  • Alteration in the Project:¬†In case of alteration in individual projects individual approval is necessary and in case of alteration in common areas approval of 2/3rd¬†of the consumers is must.
  • ¬†Obligations of the promoter in case of transfer of real estate project to a 3rd party:¬†The promoter cannot transfer its major rights and liability of the real estate project with prior approval of 2/3rd¬†of the buyers except the promoter along with prior written approval of the concerned RERA authority.
  • ¬†¬†Agent registration is mandatory:¬†Agent registration under RERA authority is compulsory to sell or advertise any project under the RERA Act.
  • ¬†Grievance Redressal:¬†In case of any grievance by promoter buyer or agent a complaint can be filed before the State Regulatory authority and such dispute shall be resolved in 60 days and in case of non-satisfaction an appeal can be filed before the Tribunal in the next 60days. In case being aggrieved by that order complaint can be filed before the concerned state High Court or the Supreme Court of India.
  • ¬†Completion Certificate:¬†The act made it compulsory to acquire commencement, completion as well as occupation certificate.¬†

Power of Attorney: An Indian Power of Attorney is a very useful instrument; it can be executed by a person i.e. the principle giving specific or general power to another person i.e. the representative, who would become the authorized attorney. The Indian Power of Attorney has to be registered in case utilizing it for buying or selling a property in India. In cases where a property has numerous owners, it would be difficult for all the people concerned to collectively complete a transaction. In such cases, granting the power of attorney to one person would make matters simple. As a result, this person would be empowered to act on behalf of all the owners collectively. The said Power of Attorney can be revoked in the following manner: PoA is also revoked when the principal dies or becomes insane or is declared insolvent, PoA can be revoked on mutually agreed terms between the principal and the representative and PoA is revoked when the specific transaction for which it was executed has been accomplished. Revocation of POA has to be done in the same manner in which it was executed. If the PoA was registered with the Sub-Registrar, you have to get it cancelled from the same office. Also, the representative and the parties concerned need to be duly informed about the cancellation of the POA. If the interests of a reasonably large number of people are involved, it is recommended that a notice be published in a newspaper. A notice about the revocation of the POA could also be posted on the property where it can be visible to the general public.

See Also

Will: A property situated in India can be inherited through WILL but if the person inheriting such property is an USA born child then he/she cannot inherit such property through Will except through special permit acquired from the Government of India. Though a person can bequeath his property by virtue of Will to his legal heir(s) limited to that heir being a Non-resident Indian. In case of inheritance of Indian property by U.S. born child the property becomes non-transferable subjected to transferring the inherited Indian property only to Indian citizens but obtaining specific permission in this regard from the Government of India is mandatory.Most foreign citizens, if resident in India on work permit, business visa, on declaration of residency, or with prior approval, may acquire property in India by purchase or inheritance; however, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan cannot acquire or transfer immovable property in India, other than by a lease not exceeding five years. No person resident outside India can transfer any immovable property located in India, except when specifically permitted under the regulations. RBI in special circumstances may allow such transfer.

Trust: A person can create a private trust where he can make one person his beneficiary and other people as fellow trustees. The property involved in this Trust is called trust property. A beneficiary of trust is the individual or group of individuals for whom a Trust is created. The trust creator or grantor designates beneficiaries and a trustee, who has a fiduciary duty to manage trust assets in the best interests of beneficiaries as outlined in the trust agreement. In addition to transferring wealth to beneficiaries such as children, individuals also establish trusts to secure certain gift and estate tax protections. A private family trust can be formed by the parents in India to hold these assets for the benefit of their children. The trustees could be relatives, professionals or a combination who will administer and invest trust assets as per the instructions in the trust deed. NRI children are named as the beneficiaries and they will be entitled to receive distributions from the trust. If the assets are held in a Trust, NRIs won‚Äôt have to worry about its immediate repatriation after the lifetime of their parents. If they require any assets, it can be distributed to them and the balance continues to remain invested in India. If an NRI returns to India, he won‚Äôt have to disclose these assets in a foreign county. The trust is governed by the Indian laws and if an NRI keeps moving across the globe, holding the assets under a trust is a practical solution for him/her so that the assets are not subjected to the laws of other countries.


Amy Ghosh is a practicing lawyer in Los Angeles.  She migrated to USA in 1987 and has been married to a (retired) rocket scientist for 35 years. She has two adult children. Before becoming an attorney, she was a bio-chemist and worked for several well-known hospitals and laboratories. Ms. Ghosh continues to be very much in touch with her motherland India and her favorite city Calcutta.  She has recently produced a Bengali movie Urojahaj-The Flight by highly acclaimed film maker Buddhdeb Dasgupta.  Ms. Ghosh is continually looking for meaningful opportunity to contribute to the society through her legal and social work.

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