Simplify transactions with NRIs
When parties across borders are involved in real estate transactions, one can use a simple legal instrument to vest power in an Indian resident
Often, high-value transactions of transfer of immoveable properties located in India, result in a stalemate due to one of the parties being an NRI/PIO/ foreign citizen. No doubt developments in communication technology are facilitating parties to engage in cross-border discussions and negotiations. However, it is seldom of help when the party abroad is unable to visit India at the desired time of execution of the necessary legal documents.
A recent case that comes to mind is that of a buyer who had entered into an agreement to purchase immoveable property in India with the seller (an NRI). The NRI seller was in India at the time of execution of agreement to sell in favour of the buyer. It was agreed between the parties that the sale deed for the property would be executed within three months’ time, simultaneous to the buyer paying the balance sale consideration to the NRI seller. The NRI seller, who was supposed to return to India to execute the sale deed in favour of the buyer, was, however, unable to do so within the specified three months. The buyer was ready with the payment of balance sale consideration and repeatedly insisted that the seller visit India to execute the sale deed and close the transaction. The buyer was also persistent that he would pay the balance sale consideration only when the seller visited India in person. The deal ultimately fell through as neither party had contemplated that a power of attorney in favour of an Indian resident, could be executed by the seller while he was abroad. The power of attorney holder in turn could have facilitated the transaction by executing the sale deed in India on behalf of the seller, within the time period of three months. Moreover, people are under the impression that a power of attorney executed abroad also requires to be registered in India, for which the seller’s presence is also required in India.
It is often not practical for parties residing abroad to incur expenses to visit India at short notice for execution of legal documents. To avoid such a scenario, the party resident in India may request the NRI/PIO abroad to execute a power of attorney in favour of a person (called the attorney) who resides in India. If the party residing abroad wants to vest broad, sweeping powers in the attorney, he may execute a general power of attorney in favour of the person he has chosen to be his attorney.
On the other hand, if the party residing abroad wants to vest a certain, specific power in the attorney, he may execute a special power of attorney in favour of the attorney. The holder of a power of attorney then has legal power to execute documents and enter into agreements on behalf. Doing so may save considerable time and money.
For such a power of attorney to be binding and recognised by law, it should be duly executed before, and attested by, the Indian consulate or notary public located in the country where the NRI/PIO is residing, as per the prescribed procedure.