PoA-based realty deals may go in Gujarat

In a move which will have an impact on the state's realty sector, the state government has proposed to do away with the power of attorney in respect of immovable property and mortgage by proposing to amend the Registration Act (1908).

Simply put, this means there will be no power of attorney transactions from April 2008 onwards. What's more, all the old transactions through this route will have to be registered by paying stamp duty.

It may be recalled that the Gujarat government had introduced Prohibition of Transfer of Immovable Property and Provision for Protection of Tenants from Eviction from Premises in Disturbed Areas Act, Gujarat in 1991 after the communal riots to prevent distress property deals between members of different communities and ghettoisation. The Act had around 20 police stations under its jurisdiction in Ahmedabad.

"Under the Act, if a member of one community wanted to sell property to member of another community in the specified areas, the deal had to be vetted by the district collector. But people learnt ways to circumvent it, as most property deals happened through the power of attorney route," said a senior government official.

In absence of provisions for compulsory registration, attempts are being made to evade payment of proper stamp duty and to make forged instruments of transfer of property.

The government is planning to make the document relating to power of attorney in respect of immovable property and the mortgage by deposit of title deeds compulsory registrable under the Registration Act, 1908, he said.

"The amendment will not only check distress ghettoisation, but also reduce the number of frauds as in many cases there are more than one claimant for one property because power of attorney are hardly registered," he said.