Things to Remember before Purchasing or Selling Property through Power of Attorney

 

INTRODUCTION

 

Today, I will talk about an interesting case in which a person sold a property that it did not own. I know that it is hard to believe this that how can a person sell a property that it does not own but imagine a situation where a person executes a power of attorney in favour of another person to rent out a property or mortgage it, but instead the power of attorney holder sells that property without the permission of the actual owner. Is such a sale of property valid?

 

This question was answered by the Supreme Court in the recent case of Umadevi Nambiar v. Thamarasseri & Others.

 

NEMO DAT QUOD NON HABET

 

Thankfully, according to the Supreme Court, such selling of property is not valid because it is a fundamental principle of law that no one can pass on a better title than what he himself has (In Latin, this is also called as nemo dat quod non habet).

 

Basically, you cannot give a thing that isn’t yours and if you do not have any ownership of a property, then you cannot transfer it to others.

 

POWER OF ATTORNEY

 

In the context of the present case, a power of attorney is simply a document that empowers a person to be an agent for a specified purpose and such agent can do only those things that are expressly written in the power of attorney. If the power to sell a property has not been provided in it, then the agent cannot go ahead with the sale.

 

To further explain this, let us take an example. suppose you are buying a property that is being sold through a power of attorney holder. In such a situation, you must check that the instrument of power of attorney expressly authorizes the agent to sell the property and get such sale of property registered in accordance with law. If such express provision to sell is not present in the power of attorney, then it would be advisable to not to go ahead with the sale.

 

SECTION 41 OF TRANSFER OF PROPERTY ACT

 

Now let us understand the second reason as to why a person can’t sell a property that it does not own. It is because of Section 41 of the Transfer of Property Act that provides that any sale of a property by an agent or a person portraying himself as an owner will be valid only when the person who has purchased such property takes reasonable care to determine that the agent has express authorization to transfer the property.

 

If the purchaser does not make honest efforts to ascertain the actual owner or the status of the property, then any such purchase of property made may be nullified by the courts. Here, by honest efforts or reasonable care, it is meant that the purchaser should read the text or contents of the power of attorney carefully and should see if all the papers of the property seem to be genuine or not. As later on, the purchaser cannot take an excuse that he did not know the law of property, or that he could not understand what was written in the documents showed to him. Basically, he cannot plead ignorance.

 

CONCLUDING REMARKS

 

In such situations, if the matter travels to the court and the purchaser wants his money back from the agent, he must show that he was either misrepresented or cheated or deceived and was made to believe that the agent had the power to sell such property.

 

Thus, we see that if a person sells a property that he does not own or if a power of attorney holder sells a property that he is not authorized to sell, such sale of property is legally invalid. Essentially, one must remain cautious by examining all the documents relating to the property and in case there is a power of attorney holder in between, it must be made sure that he is duly and expressly authorized to sell the property.