How to borrow Home Loan on GPA Property in Delhi NCR ?

Home Loan on GPA Property is a Housing Loan in which some HFCs/NBFCs provide financial assistance with specific terms and conditions (i.e.- Subject to Sale Deed).

What is GPA ?

GPA stands for General Power of Attorney. It is a legal instrument that is used by a person (Grantor) to confer Authority on the person (Grantee) to act on his behalf. GPA can be registered anywhere in the country and it does not necessarily have to be registered with the authority which has the jurisdiction on the property.

Why does a GPA have to be registered ?

The government realized properties were being bought and sold through GPAs and no stamp duty was being paid on these transactions. To stop this and boost its revenues, in 2004, the Delhi government made it mandatory for GPAs to be registered at 90% of the stamp duty rate applicable to sale deed. It made it clear the GPAs that are not registered will have no legal validity.

Why Banks, HFCs or NBFCs extends financial assistance with Subject to Sale Deed Condition in GPA Home Loan ?

The General Power of Attorney (GPA) is not a valid instrument for transferring title to property. A sale deed must be made to transfer the title of the property, with the buyer paying the stamp duty and registration fee. The High Courts and the Supreme Court have also stated on several occasions that the sale on the basis of GPA is not valid. Thus even the current seller cannot be considered valid.

To mitigate this risk factor, the NBFCs has implemented certain rules such as the current seller’s GPA being at least 3 years old and the imperative to obtain a Sale Deed in the name of the current buyer.

Courts view on the sale of the immovable property through GPA, ATS, WILL, Declaration and Receipt

The High Courts and Supreme Court numerous occasions have stated that sale on the basis of GPA is not valid. It has been mentioned clearly in the  judgement that the transactions related to an immovable property can only be done by the way of stamped and registered conveyance deed, as applicable under the respective State Government Act.

Home Loan on GPA Property | GPA Home Loan

General Power of Attorney (GPA) is not a valid instrument to transfer property titles. A sale deed must be carried out for  transferring property titles, following which the buyer has to pay stamp duty and  registration charges. The seller will also have to bear the burden of capital gain tax on the transaction.

Buying property through General Power of Attorney is still popular in many parts of India including Delhi-NCR due to purported benefits it’s provide. It is a legal documents that allow an individual to act on behalf of other person legally to manage his/her various affairs. It also gives broad authorization to the individual to make medical decisions, legal choices and financial or business decisions.

From a seller’s respective, the GPA rout allows them to sell a property even if they do not hold clear titles of the property. Since the property was never sold and the seller continued to be the owner thereof, he was never levied the capital gain tax. Also many schemes of urban development authorities, where the properties are allotted on a leasehold basis, come with a significant gestation period before the property can be sold legally.

The buyers also stands to be in an advantageous position as he could undertake all acts with respect to the property as the owner, including selling the property without paying stamp duty on the document of transfer.

However, there are NBFCs which provide financial assistance against General Power of Attorney (GPA) in flat purchase, floor purchase, villa purchase, commercial property purchase, independent house purchase, plot purchase or industrial property purchase with some special terms and conditions. (I.e. – subject to sale deed). Buying and selling property through GPA is also very popular in Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad. Few NBFCs provides Home Loan on GPA Property in Delhi, Gurgaon , Faridabad, Ghaziabad, Noida and Greater Noida also.

Home Loan on Power of Attorney

Powers of attorney can convey as limited or as broad a power as the person granting them desires. A person who grants power of attorney, called the principal, can grant the person or organization receiving the power, known as the attorney-in-fact or the agent, any powers he so chooses, including the right to enter into loan agreements.

If you are granted power of attorney, you may be able to sign loan agreements on behalf of the person who granted you that power. However, whether you have this right or not depends entirely on factors such as the power of attorney document itself and when you want to enter into the agreement.

Required Documents for Home Loan on GPA Property