• Buying Flat that was earlier registered using Power of Attorney

Hi,
I am planning to buy a flat in Thane in resale from Mr "A". This flat is registered in the name of Mr A and he is the second owner. Mr A brought this flat from first owner Mr X.

The first owner Mr X was in abroad at the time of sale, so he gave Power of Attorney to Mr A and Mr B (son of Mr A) and both Mr A and Mr B registered flat in the name of Mr A. So effectively on entire Sale deed, we see only signatures of Mr A as both Seller and Buyer and there is a copy of power of attorney at the end.

I visited a local lawyer for document verification and he pointed out following issues with the sale deed -

1) The power of attorney from Mr X to Mr A and B, mentions that they have been granted "Authority to Purchase" instead of "Authority to Sale". Lawyer said that it should have been "Authority to Sale" as they are selling flat on behalf of Mr X to themselves.

2) The payment receipt in registration documents was also signed by Mr A, so it does not indicate that the consideration amount was finally accepted to Mr X. Power of Attorney does not state that they can sale flat or collect payment on behalf of Mr X.

3) Power of attorney was made on 500 Rs stamp paper and not registered. Lawyer told that as Mr X and Mr A are not in blood relation, Power of Attorney should have been registered.

My Lawyer mentioned that he does not see any fraud or foul play and this just seems like a careless clerical mistake from previous lawyer. I also personally know Mr A and B and trust them. I also know that Mr X does not have any concern with past sale and has happily sold flat.

Lawyer, suggested that he can register the sale deed between myself and Mr A without any problem. On safer side, he says that we get a notarized Declaration from Mr X on stamp paper saying he has sold flat to Mr A and have received full and final payment and have not objection with sale deed.

Please help me with following questions -

1) Should I go ahead with this deal or it should be avoided due to above clerical mistake?

2) Is the declaration on stamp paper as suggested by my lawyer good enough to safeguard me from any future issues?

3) If I buy and register flat in my name, can I face problems when I try to sale it because of defect in the chain of document.

4) If declaration from Mr X is not enough, what else can be done to fix this problem?

Please note that we may have limited access to Mr X and he may not show interest in going through additional paper work considering that sale had happened 8 years back.

Please also note that Mr A has share certificate on his name and can also get NOC from society.
Asked 4 years ago in Property Law
Religion: Hindu

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12 Answers

1. If you confirm the fact that Mr. X sold the land to A and has received the considerations and will not raise any issue in future with regards to the same then only purchase the said property.

2. That is not good enough, just that if you are sure and feel confident then only go ahead and on basis of undertaking.

3. Yes, you might face problem

4. Ask Mr. X to be a witness in the sale deed.

In that case make a paper publication in the city where Mr. X is living, get a declaration from him before two witnesses and then only purchase the land.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

After reading all facts and issues of your case I have below suggestions :

1) As you have mentioned above that you know very well all of them i.e. A, B and X. You can make Tripirate sale deed and get signature at the time of registration. ask "X" to come for one day at registered office at the time of registration.

2) Secondly, If "X" is not ready to come than you can mentioned indemnity clause very strongly against Mr.A. in the sale deed. Plus drafting sale deed must be very perfect and mentioned all historical mistakes.

Let me know if you require any further assistance.

Ganesh Kadam
Advocate, Pune
12335 Answers
191 Consultations

4.9 on 5.0

01. Sir the previous owners can first execute a rectification deed and a confirmation deed to correct the previous mistake and confirm the transaction same can be registered and then the property can be purchased by you.

02 Sir would suggest registered rectification deed.

03. Yes you will face problem in sale and loan if any taken on property in future.

04. Rectification and confirmation deed by the previous owner and seller is required to full proof the transaction.

Sir X can give POA for rectification deed it is necessary.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

1) you can go ahead with deal if you so desire

2) declaration on stamp paper should protect your interest

3) deed of confirmation can be executed by X that he has sold property to A

Ajay Sethi
Advocate, Mumbai
87897 Answers
6207 Consultations

5.0 on 5.0

The local lawyer is correct

The PoA from X to A and his son ought to have contained a power to sell the 50% share of X and to receive money on behalf of X and comply with registration formalities

A PoA intended for authorising someone to sell property is compulsorily required to be registered as per the Maharashtra Stamp Act. This is required so that the party does not evade paying stamp duty on sale transaction. There were practices when a owner would sell his property through a PoA enabling the buyer to deal with the property on behalf of grantor seller and the seller would also execute a Will in favour of the buyer so that after demise of seller (when poa becomes useless), the buyer would be protected under the bequest made in the Will. This entire transaction would be done to evade stamp duty payment on the sale deed, resulting in loss of revenue for the government. That is why the legislature passed an amendment to the stamp act making registration compulsory for a power of attorney containing a power to sell

However in your case stamp duty is not the issue as on the sale deed between X (through his poa holder A) and A, full stamp duty is paid

But absence of authority/power to sell in the poa and non knowledge about actual receipt of consideration by X from A, would create issues in future

Especially when you intend to sell this flat and the buyer is buying through a bank loan. The bank will obviously raise that issue. And banks raise issues on small irrelevant things and refuse to sanction loan. So you may find it difficult to find buyers if such buyers avail bank loan

The declaration from X is a good idea. However as X is abroad, instead of normal notary, it is advisable to have the declaration attested by Indian Consulate or Embassy in that country

I have come across instances where foreign notaries are not accepted in India

The attested declaration of X can be attached to your sale deed so that it forms part of registered document

If you can have X as confirming party in your sale deed, then nothing like it

You just need to email the draft agreement to X, he can take print on green ledger and then sign it before indian embassy

For registration purpose, a normal POA can be taken in your favour to comply with registration formalities on behalf of X

The POA from X to you also needs to be attested and signed before Indian Embassy and it may also require another procedure of apostille

If X is a confirming party in your sale deed then it will remove the clout on your title

If above is too cumbersome then the declaration signed and attested as explained above would suffice

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

Legally it is not safe. It is safe until its challenged. Once you have possession and nobody challenges then there is no issue. Apart from aforesaid advice from your lawyer you can try indemnity bond also.The power of attorney must be compulsorily registered. If you are eager to buy then try out the above things. You may have difficulty in future sale as the title of previous owner is defective title. A person with defective title cannot pass on a clear title to you.

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

1) in 2010 registration of POA for sale of property was optional

2) sub registrar office verifies agreement document before registration

3) registrar would not look at previous agreements

Ajay Sethi
Advocate, Mumbai
87897 Answers
6207 Consultations

5.0 on 5.0

1. Even if POA is notarized it is valid at that point of time.

2 if registered there must be number written on it that is registration no. And seal of sub registrar office.

3.He verifies the parties and then register same. Contents are not varfied though

No such defence can be taken.

4. Sir for clear title it is neccessariy that it is amended though registrar will register it based on record.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

full stamp duty appears to be paid on the agreement between X and A

That agreement was signed on behalf of X by A

As full stamp duty is itself paid on agreement, you need not worry whether the power of attorney granted by X to A was stamped or registered

the purpose behind having such POA fully stamped was to ensure that parties do not carry out a sale transaction through the POA mode and evade stamp duty on sale transaction

you just need to check whether X received full consideration towards sale of his half share to A under the above agreement

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

2) At the end of power of attorney, I see photos taken from webcam like they take in registrar office with thumb impression. Does it mean it is registered? How can I verify whether or not it was registered.

This means that the same is registered.

3. No they do not verify the contents of the documents.

4. Registrar does not look the previous documents.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. It appears to be more ambiguous and no clarity to the title, hence it may not be advisable to go ahead with the huge investment.

2. Nobody can predict the mood of such people at a later stage, hence anything that can be done should be legally valid, unless it cannot be enforceable.

3. Yes, you ,may find problems at the time of selling the property.

4. Dont compromise on legal issues by any such legally invalid things, you can ask him to execute a registerd ratification deed.

T Kalaiselvan
Advocate, Vellore
78050 Answers
1543 Consultations

5.0 on 5.0

1. First of all power of attorney cannot be given to two people simultaneously by the principal on the same proeprty.

As your advocate has pointed out that A has been authorised to purchase in the POA deed, there appears some ambiguity in it and also what about the other POA holder's role in this sale deed?

There is no clear and marketable title to the seller hence a ratification by the original owner by a registered document may make it more valid and advisable to purchase.

2. You can find the registration number endorsed in it

3. Registrar is not an authority for the genuineness of the documents submitted before him, moreover the registrar cannot be held liable for any fault in the document, the next solution is to approach court

4. It depends. No predictions can be made on your guesses because it is violation of law.

T Kalaiselvan
Advocate, Vellore
78050 Answers
1543 Consultations

5.0 on 5.0

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