Dec. 15 – A Letter of Authority (LOA) can be used for most tasks, but should not be used for tasks that are more complicated. When large transactions are involved Power of Attorney (POA) is a better option because POA sets out the manner in which an action is to be carried out. An LOA may or may not identify how an action is to be carried out. In addition, POA is a notarized certificate with an added perimeter, while an LOA is not an authenticated document. An LOA merely authorizes one person to do a particular act for another person. Therefore, it is best used for a very specific purpose. It can be used, for example, when collecting or submitting documents on the authorizing person’s behalf. Experts agree however, that when large transactions need to be made, the authorizing person should opt for POA instead. There are two types of POA — general and special. POA is considered “special” if the appointment of POA is made for a single specified act or acts. POA is “general” if it is intended to grant general decision-making power with regard to certain acts, e.g., representation before the income-tax department. Additionally, POA may be revocable and irrevocable.

POA may or may not require registration. A POA dealing with immovable property requires mandatory registration. For example, POA that accompanies a development agreement would require registration while the power to operate a bank account may not. A Supreme Court judgment ruled that general POA cannot be used for transfer of immovable properties. The Supreme Court held that general POA has no legal sanctity and immovable property can be sold or transferred only through registered deeds. Continue reading →