A Mortgage Loan Against GPA Property is a type of Secured Loan where a applicant avail funds by providing his GPA Property as collateral to the Banks/HFCs/NBFCs.
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/NBFCs extends financial assistance with Subject to Sale Deed, Gift Deed or RM Condition in Mortgage Loan Against GPA Property ?
The General Power of Attorney (GPA) is not a valid instrument for transferring title to property. A sale deed or Gift 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 reduce this risk factor, the HFCs/NBFCs has implemented certain rules. For example, the applicant’s GPA must be at least 3 years old. Also, the applicant will have to have a registered mortgage in favor of the HFCs/NBFCs. If the applicant does not want to get registered mortgage, then he has to gift deed in favor of a member of his family. Also, the family member will come on loan as a co-applicant or the applicant gets a Sale Deed in his name from the old vendor.
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.
Loan Against GPA Property
General Power of Attorney (GPA) is not a valid instrument to transfer property titles. A sale deed of gift 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 HFCs/NBFCs which provide financial assistance or Loan against GPA (General Power of Attorney) Property with some special terms and conditions. (I.e. – Subject to Sale Deed / Subject to Gift Deed or Subject to Registered Mortgage). Transferring ownership through GPA is also very popular in Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad. Few HFCs/NBFCs provides mortgage loan against GPA Property in Delhi, Gurgaon , Faridabad, Ghaziabad, Noida and Greater Noida also.
Mortgage 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 Mortgage Loan against GPA Property
| Mortgage Loan against GPA Property : Required Documents for Salaried
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
Loan Against GPA Property : Required Documents for Self Employee Business Owner
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
Mortgage Loan Against GPA Property : Required Documents for Self Employee Professional
Main Applicant
Co-Applicant
Property Documents Minimum 13 Years ownership transfer chain |
