• Purchase property from a GPA holder and the proceeds

Sir/Madam, Mr.A and Mrs.A have purchased a property via a Registered Sale Deed in June-2011 through GPA holder (Mrs.M) who is Mr.A's mother. This GPA is NOT registered at the Sub-Registrar and is done on a Stamp paper of Rs.200. 
Now, Mr.A and Mrs.A wants to sell this property to me and they can sign the Sale Deed but wants the sale amount/consideration to be credited or issued to the GPA holder (Mrs.M). 

1. Can this transaction be done and sale amount be given to the GPA holder?
2. In whose name should I do the 1% TDS of the sale amount?
3. The Sale Deed has Mr.A and Mrs.A's, PAN number. If I do the TDS in the name of GPA holder will it not be a Income Tax issue later on?
4. GPA holder can have a new registered GPA with new clause to receive the proceeds. Can we buy the property based on this?
5. if none of the above options works, What other option do I have to buy this property? Please advise.
Asked 4 years ago in Property Law
Religion: Hindu

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13 Answers

1. Do not transfer a single farthing to anyone except the vendor who are signing the deed.

2. Since the deed is executed and registered by A and B only and not through their GPA holder M , there is no question of sending any money to anyone else.

3. The TDS would be deducted from the account of the vendor- A and B and no one else.

4. Again no question TDS deduction from account of M or anyone else.

5. If A and B has given fresh registered GPA to M and M alone is signing the deed on behalf of A and B then only the question of payment to M arises.

6. Make payment to M only if she is given a registered GPA . Otherwise pay to A and B if they only sign in the deed.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

Property stands registered in the names of both Mr A and Mrs A, who have purchased it through a notarized stamp paper executed in favour of Mr A Mother. The katha in respect of the said property stands in the name of both owners Mr and Mrs A.

Now you intend to purchase it from the joint owners Mr and Mrs A, however both the sellers want you to pay the sale consideration amount in favour of Mr A Mother, Mrs M for reasons best known to them. This arrangement can be spelt out in the sale deed with the consent of both sellers, which would make it valid and legal.

Now for all practical purposes since Mr and Mrs A are the joint owners, the TDS must be deducted into the PAN No's of both the sellers and not into the account of Mrs M. The sale consideration being paid to Mrs M should be minus the TDS amounts only.

Any other option would create problems and the I T Dept might come calling on you very soon.

Kiran N. Murthy
Advocate, Bangalore
1298 Answers
194 Consultations

5.0 on 5.0

1. The sale consideration amount can be paid to the vendor only and not to a third person.

2. Against vendor.

3. You cannot deduct tax at source against GPA who is a third person in this transaction.

4. In that cthe GPA should execute the registered sale deed on behalf of the principal.

5. You take a legal opinion from a local lawyer for all such further issues.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

1) insist that payment would be made by you only in name of Mr and Mrs A

2)TDS should be deducted from sale consideration paid to both co owners

3) Insist on registered GPA with clause to receive sale proceeds . then only make payment directly to GPA holder

Ajay Sethi
Advocate, Mumbai
87892 Answers
6207 Consultations

5.0 on 5.0

Hi

You can buy the property using the following procedure.

1) The registered Sale deed should be executed by Mr.A, Mrs. A in your favour as sellers.

2) You should mandatorily include Mrs.M as "Consenting Party" to the aforementioned registered sale deed.

3) So all in all there will be four signatories in the sale deed

a) Mr.A,Mrs.A, Mrs.M(as consenting party) and yourself.

4) You can always include a clause in consideration part of sale deed stating that at the specific request of Mr.A and Mrs.A, the sale consideration is being paid to the Mrs.M.

6) TDS should be borne in name of Mr.A and Mrs. A Only as they are the sellers.

7) A new GPA is not required if you follow the aforementioned procedure.

8) Stamp papers for sale deed should be purchased in the name of Mr.A and Mrs.A only.

Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2169 Answers
394 Consultations

5.0 on 5.0

Dear Client,

In whose name property actually was ? Who given POA to Mrs. M.

1. Can this transaction be done and sale amount be given to the GPA holder? ---- Clearly mention in the sale deed that on the instance of seller, money debited in GPA. account. no issues.

2. In whose name should I do the 1% TDS of the sale amount? --- Seller Mr.A and Mrs.A.

3. The Sale Deed has Mr.A and Mrs.A's, PAN number. If I do the TDS in the name of GPA holder will it not be a Income Tax issue later on? - -- Yes.

4. GPA holder can have a new registered GPA with new clause to receive the proceeds. Can we buy the property based on this? ---- She has already sold the property through registered sale deed, she has no title in the property, No purpose or validity of fresh POA of Mrs M.

5. if none of the above options works, What other option do I have to buy this property? ----- Mention clearly in sale deed that on the basis of notorised POA, property sold to Mr and Mrs. A . and make her witnesses and the person in whose name property was before sale to Mrs.Mr. A.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

The said GPA being not registered is bad in law and not valid. In a latest judgement supreme court termed sale of property through POA illegal. Yes income tax issues will definitely occur.

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

Dear Sir,

My answers are as follows:

1. Can this transaction be done and sale amount be given to the GPA holder?

Ans: Yes, taking into consideration the relationship between A and Mrs. A. It is better to get sale deed get executed by both the persons instead of one of them being consenting witness. Secondly in the sale deed a recital may be stated that entire amount is paid to GPA holder as per the instructions of co-seller.

2. In whose name should I do the 1% TDS of the sale amount?

Ans: It is better to pay TDS in joint names of both the vendors.

3. The Sale Deed has Mr.A and Mrs.A's, PAN number. If I do the TDS in the name of GPA holder will it not be a Income Tax issue later on?

Ans: Since GPA sales are not valid as per Supreme Court judgment so treat this transaction as joint transaction by the both vendors and take PAN numbers of both the persons.

4. GPA holder can have a new registered GPA with new clause to receive the proceeds. Can we buy the property based on this?

Ans: No, because such sale is invalid.

5. if none of the above options works, What other option do I have to buy this property? Please advise

Ans: The above method is appropriate. Please see the following judgment of Supreme Court on the issue of GPA sales.

========================================================================================

No property sale on power of attorney: Supreme Court

Property sales through the common practice of general power of attorney (GPA) will not give ownership title to the buyer.

In a landmark judgment that is expected to send a large number of property owners into a tizzy, the Supreme Court held that the GPA method of immovableproperty sales is not a valid form of transfer of property.

A three-judge bench presided over by Justice R. V. Raveendran said that property can be lawfully transferred only through registered sale deeds.

"A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property," the bench said, after interpreting various provisions of the law concerning property sales. However, the bench said the judgment will not affect "genuine transactions" under the GPA.

The judgment delivered on Wednesday would have an impact on both freehold and leasehold properties and affect the mode of transfer of property in Delhi and the National Capital Region (NCR) where GPA sales are very common. Even though it can cause some hardship to those who have already purchased property through the GPA, the order will help curb evasion of duties, flow of black money into real estate and also save people from being cheated by unscrupulous owners selling the same property to several people.

• Flat sold by builder to third party whem my Agreement to sale was valid

I had executed a Agreement to sale on one flat at Agra U.P. in 02/11/2012 with a validity of 15 months ,after 15 months the builder with mutual consent and reason that the the construction work is not over renewed it for another 12 months upto 28/01/2015,again with the same reason it sought and extension of another 6 months of agreement to sale which was made and agreement to sale was extended upto 22/07/2015.

After this we issued a notice to the builder and on reply to notice the builder through its legal counsel sought again time upto 15/10/2015.Subsequently again a notice was given on 17/10/2015 to execute the sale deed but the builder again replied by letter and sought extension upto 15/07/2016 with the same reason that flats are incomplete.After 15/10/2016 the builder is untraceable and recently he was arrested on forgery charges and currently in jail.On enquiry I came to know that the builder sold my flat that was having valid agreement to sale to third party with sale deed dated 28/06/2014.During this period my agreement to sale was valid but now builder is in jail what is the legal remedy and the party having sale deed has occupied the flat .now what is the legal remedy me to get my flat back.

Section 53A in The Transfer of Property Act, 1882

1[53A. Part performance.—Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.]

Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

1. Yes it should be specifically mentioned in deed.

2.In your name of mr. A AND mrs. a as your giving it as part of your consideration.

3. See they are directing the purchaser to clear there dues so TDs paid should be in there name as they gaining and they are seller just proceeds go to GPA holder to clear dues.they hold valid title to property.

4 The property is already purchased by you and so new GPA won't have relevance.

5. This is best option kindly purchase property make TDs payment on name of Mr. And mrs. A AMD MENTION SPECIFICALLY THAT ON INSTANCE AND REQUEST OF MR AMD MRS A THE CONSIDERATION IS PAID TO GPA HOLDER.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

1. In case the GPA is not registered I would not advise you to do the transaction.

2. That goes to the seller and not to the GPA holder.

3. Do not go into the TDS aspect, such aspect of purchasing the land in itself is not good in the eyes of law and therefore do not purchase the property as per this arrangement.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. Can this transaction be done and sale amount be given to the GPA holder?

Advise not to credit amount to GPA holder. payment should be to seller.

2. In whose name should I do the 1% TDS of the sale amount?

Seller name.

3. The Sale Deed has Mr.A and Mrs.A's, PAN number. If I do the TDS in the name of GPA holder will it not be a Income Tax issue later on?

Yes. True

4. GPA holder can have a new registered GPA with new clause to receive the proceeds. Can we buy the property based on this?

Not advisable.

5. if none of the above options works, What other option do I have to buy this property? Please advise.

Advise to make payment to seller and 1% TDS to them. Further take the signature of the M should sign the sale deed as this proposed GPA.

Shettar SS
Advocate, Bangalore
182 Answers
1 Consultation

4.4 on 5.0

1. No. The sale deed shall have to be paid to the title holders of the said proiperty.

2. If you pay 50%b of te sale proceeds each to Mr.A nd Mrs A, then TDS shall have to be deducted from both of their considerations.

3. Yo can not pay the consideration to the GPA holder while buying teh property from Mr.A and Mrs A.

4. Sale throufgh GPA holder has been directed against by the Supreme Court while passing the judgementin the year 2012 in case of Syrya Electrics ..... Vs.................The State of Haryana unless the GPA holder is a close relative of the title holders and the said title holders are sick and/or infirm to come to the registration office to register the sale deed.

5. Get the sale deed registered by the title holders of the said property.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

Hi,

In order to avoid any further issue you may enter into a simple agreement with seller, POA holder and get it notorised. Do mention all the things in that agreement.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

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